Question
requirement illustrate a company's break-even point with a CVP graph. use the template below Starlight Dancing specializes in dance lessons for senior citizens. The dance
Starlight Dancing specializes in dance lessons for senior citizens. The dance studio employs four dance instructors. One instructor also fills the role of location manager and is paid a salary of $3,000 per month. The other dancers are paid $1,500 per month. In addition, each dance instructor is given a commission of $4.50 per new client they bring in. Other monthly expenses are as follows:
Advertising | $200 per month |
Rent | $1,100 per month |
Depreciation | $25 per month |
Supplies | $0.30 per student |
Utilities | $175 per month plus $0.20 per student |
Currently Starlight charges $10 per student.
(1) Determine the variable cost per student and the total monthly fixed costs.
(2) Compute break-even point in units and dollars.
(3) Prepare a CVP graph. Assume a maximum of 2,000 students are provided with dance instruction. Use increments of 250 for units on the horizontal axis and increments of $2,000 for the vertical axis.
(4) Determine the net income assuming 2,000 students are provided with dance instruction.
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