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How many sessions must they provide this year

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Reference no: EM133094582

Question - Co-Video videos people's surgeries, and has the following cost structure:

Charge per video session $180

Variable cost per video session $45

Fixed costs $15,000

They expect to perform 1,000 two hour session each year (one employee, 8hrs/day, 5 days/week, 50 weeks/year).

A. Construct PETA's profit and loss statement.

Total revenues (180 x 2000) 360,000

Total variable costs (45 x 2000) (90,000)

Total contribution margin 270,000

Fixed costs (15,000)

Profit (net income) 255,000

B. How many sessions must PETA's perform to breakeven?

C. The owner would like to retire and live of just his investment in this business. To earn a profit of $175,500 (his current salary), how many sessions must they provide this year?

D. If the employee worked only half time, thus only performing 500 sessions per year, The owner thinks he will earn half of the amount found in Part A. What would actually be the profit/loss (fixed costs remain the same)?

Reference no: EM133094582

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