What enrollment will enable alameda tile to break even

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Reference no: EM132775211

Alameda Tile sells products to many people remodeling their homes and thinks that it could profitably offer courses on tile installation, which might also increase the demand for its products. The basic installation course has the following (tentative) price and cost characteristics.

Tuition$420 per student
Variable costs (tiles, supplies, and so on) 240 per student
Fixed costs (advertising, salaries, and so on) 99,000 per year

Problem a. What enrollment will enable Alameda Tile to break even?

Problem b. How many students will enable Alameda Tile to make an operating profit of $30,600 for the year?

Problem c. Assume that the projected enrollment for the year is 800 students for each of the following (considered independently):

1. What will be the operating profit (for 800 students)?
2. What would be the operating profit if the tuition per student (that is, sales price) decreased by 10 percent? Increased by 22 percent?
3. What would be the operating profit if variable costs per student decreased by 14 percent? Increased by 15 percent?
4. Suppose that fixed costs for the year are 10 percent lower than projected, whereas variable costs per student are 5 percent higher than projected. What would be the operating profit for the year?

Reference no: EM132775211

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