Little Swim School ("LSS") runs swimming classes for children aged 3 -15 years old It operates out of a purpose-built indoor pool in southern Singapore. Over the years, through word-of-mouth, the school has grown to its current enrolment of 300. The indoor pool was built three years ago at a cost of $800,000, when the school first started its operations. Annual depreciation is $80,000. Monthly utilities expense is $240,000 and the receptionist is paid $2,500 per month with an additional one month bonus paid in December. The owners (the two owners who are also coaches get an equal share of 50% of profits after all expense have been deducted). Coaches are paid $3,000 per month and one month bonus paid in December Each child at the school pays fees based on level of proficiency. Beginners pay S50 a lesson, intermediate students pay $80 per lesson, and advance students pay $90 per lesson. Each weekly class lasts 45 minutes and class size is limited to 4 students. The school operates 7 days a week on a four weeks per month schedule, with 10 coaches (including the two owners) and one receptionist. Classes start every hour between 9 am and 7 pm except between 1 to 2 pm (i.e. each instructor can take up to a maximum of nine (9) classes each day, seven days a week). Assume that every student will stay at least 12 months. Enrolment IntermediateAdvance Total eginneiI User of services Number of students 120 120 60 300 $50 $80 Fees per lesson $90 $24,000 $38.400$21,600 $84.000 Total monthly fees $1,008,000 Required: (a)Compute the breakeven point in terms of the lessons taken by students and number of students for LSS. Clearly state any necessary assumption(s) for your computations. What is the amount of the annual profit (or loss) for LLS currently? (10 marks) (b) The owners of the business wants to grow the business and is considering paying a marketing company to set up a website and run marketing promotions in March. The marketing effort (including the website set up) will cost LSS a one-time fee of $95,000. The marketing company projects that this effort can increase the number of students in the beginner's classes by 30%. Ifnecessary, LLS will have to hire extra coaches in order to meet the increase in demand, Perform a quantitative analysis to determine if this plan is a good idea for LSS. What is net effect on profit for LSS if the marketing plan is executed? Clearly state any necessary assumption(s) made in your analysis (7 marks) (c) Steady Tots ("ST"), a mid-sized childcare operator in Singapore has approached LSS to conduct beginner swimming classes for its students. ST would bus 50 children (aged 4 and 5) to LSS on Tuesday monings for lessons at 10 am. For this special request LSS is proposing to conduct classes that have maximum capacity of 5 children, instead of their normal maximum of 4 students per class Currently, LSS has 10 intermediate students taking classes at the 10 am Tuesday slot. LSS has no plans to hire extra coaches for the sake of taking on students from ST. Hence, if LSS accepts STs request, LSS will have to lose the 10 intermediate students ST is willing to pay LSS a fixed amount of $100 per student per month. The fee.s will include LSS providing a pair of goggles per student. The goggles will cost LLS $650 in total. All other costs remain the same. Keep the original assumption that every student will stay for at least 12 months (i) Advise LSS if they should accept the students from ST. Show computations to support your recommendation. (ii) Compute the maximum number of new students LLS can take in from ST without having to hire additional coaches. Make one suggestion on what LLS can do to eliminate the number of coaches as a constraint with respect to Ss request. (9 marks) (d) List three (3 qualitative factors that LSS should consider when deciding whether to accept the students from ST (6 marks) Little Swim School ("LSS") runs swimming classes for children aged 3 -15 years old It operates out of a purpose-built indoor pool in southern Singapore. Over the years, through word-of-mouth, the school has grown to its current enrolment of 300. The indoor pool was built three years ago at a cost of $800,000, when the school first started its operations. Annual depreciation is $80,000. Monthly utilities expense is $240,000 and the receptionist is paid $2,500 per month with an additional one month bonus paid in December. The owners (the two owners who are also coaches get an equal share of 50% of profits after all expense have been deducted). Coaches are paid $3,000 per month and one month bonus paid in December Each child at the school pays fees based on level of proficiency. Beginners pay S50 a lesson, intermediate students pay $80 per lesson, and advance students pay $90 per lesson. Each weekly class lasts 45 minutes and class size is limited to 4 students. The school operates 7 days a week on a four weeks per month schedule, with 10 coaches (including the two owners) and one receptionist. Classes start every hour between 9 am and 7 pm except between 1 to 2 pm (i.e. each instructor can take up to a maximum of nine (9) classes each day, seven days a week). Assume that every student will stay at least 12 months. Enrolment IntermediateAdvance Total eginneiI User of services Number of students 120 120 60 300 $50 $80 Fees per lesson $90 $24,000 $38.400$21,600 $84.000 Total monthly fees $1,008,000 Required: (a)Compute the breakeven point in terms of the lessons taken by students and number of students for LSS. Clearly state any necessary assumption(s) for your computations. What is the amount of the annual profit (or loss) for LLS currently? (10 marks) (b) The owners of the business wants to grow the business and is considering paying a marketing company to set up a website and run marketing promotions in March. The marketing effort (including the website set up) will cost LSS a one-time fee of $95,000. The marketing company projects that this effort can increase the number of students in the beginner's classes by 30%. Ifnecessary, LLS will have to hire extra coaches in order to meet the increase in demand, Perform a quantitative analysis to determine if this plan is a good idea for LSS. What is net effect on profit for LSS if the marketing plan is executed? Clearly state any necessary assumption(s) made in your analysis (7 marks) (c) Steady Tots ("ST"), a mid-sized childcare operator in Singapore has approached LSS to conduct beginner swimming classes for its students. ST would bus 50 children (aged 4 and 5) to LSS on Tuesday monings for lessons at 10 am. For this special request LSS is proposing to conduct classes that have maximum capacity of 5 children, instead of their normal maximum of 4 students per class Currently, LSS has 10 intermediate students taking classes at the 10 am Tuesday slot. LSS has no plans to hire extra coaches for the sake of taking on students from ST. Hence, if LSS accepts STs request, LSS will have to lose the 10 intermediate students ST is willing to pay LSS a fixed amount of $100 per student per month. The fee.s will include LSS providing a pair of goggles per student. The goggles will cost LLS $650 in total. All other costs remain the same. Keep the original assumption that every student will stay for at least 12 months (i) Advise LSS if they should accept the students from ST. Show computations to support your recommendation. (ii) Compute the maximum number of new students LLS can take in from ST without having to hire additional coaches. Make one suggestion on what LLS can do to eliminate the number of coaches as a constraint with respect to Ss request. (9 marks) (d) List three (3 qualitative factors that LSS should consider when deciding whether to accept the students from ST (6 marks)