Reference no: EM132379682

Question

Koala Bear Day-care provides day-care for children from Mondays through Fridays. Its monthly variable costs per child are:

Lunch $100

Educational supplies 75

Other supplies (paper products, toiletries, etc.) 25

____________

Total $200

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Monthly fixed costs consist of:

Rent $2,000

Utilities (electricity, water, telephone expenses) 300

Insurance 300

Salaries 2,500

Miscellaneous 500

_________

Total $5,600

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Koala Bear charges each parent $600 per child.

REQUIRED:

A. Calculate the break-even point.

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

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?

D. How can a company with multiple products calculate its break-even point? Discuss and support your discussion by readings and research.