It is about Break Even Quantity

1. 1. 1. A not-for-profit childcare center is planning to expand its services by offering an after-school program. The childcare center operates 40 weeks out of the year, with the after-school program running 4 hours a day, 5 days a week. The program will have a capacity of 20 students per week and plans to operate at capacity through the year. The program will be staffed by two teachers who will each be paid $25 per hour. The program will pay $15,000 a year in rent and utilities, spread evenly throughout the year, and will also pay $200 per week it is open for childcare insurance. The program will purchase furniture and media equipment at a cost of $10,000. The furniture and equipment are expected to last 5 years and to have no salvage value. In order to purchase the furniture and equipment, the program will take out a bank loan of $8,000 on the first day of operations. The bank loan has an annual interest rate of 4%; no principal repayment will be due during the first year. Supplies will cost $5 per student per week and snacks will cost $3 per student per week. What fee should the center charge per child per week in order to break even? Use break-even analysis to solve this problem.