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QUESTION 2 (10 Marks) Koala Bear Day-care provides day-care for children from Mondays through Fridays. Its monthly variable costs per child are: Lunch $100 Educational
QUESTION 2 (10 Marks) Koala Bear Day-care provides day-care for children from Mondays through Fridays. Its monthly variable costs per child are: Lunch $100 Educational supplies Other supplies (paper products, toiletries, etc.) Total $200 Monthly fixed costs consist of: Rent $2,000 Utilities (electricity, water, telephone expenses) 300 Insurance 300 Salaries 2,500 500 Miscellaneous Total $5,600 Koala Bear charges each parent $600 per child. REQUIRED: A. Calculate the break-even point. (2 Marks) B. Koala Bear's target profit is $10,400 per month, calculate the number of children who must be enrolled to achieve the target profit (2 Marks) C. Koala Bear lost its lease and had to move to another building. Monthly rent for the new building is $3,000. At the suggestion of parents, Koala Bear plans to take children on field trips. Monthly costs of the field trips are $1,000. By how much should Koala Bear increase fees per child to meet the target profit of $10,400, assuming the same number of children as in requirement B? (3 Marks) D. How can a company with multiple products calculate its break-even point? Discuss and support your discussion by readings and research
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