Reference no: EM13903322
CVP analysis with semifixed costs. Melissa Mooring, director and owner of the Kids Education Center, has a master's degree in elementary education. In the seven years she has been running the Kids Education Center, her salary has ranged from nothing to $20,000 per year. ‘‘The second year,'' she says, ‘‘I made 62 cents an hour.'' (Her salary is what's left over after meeting all other expenses.)
Could she run a more profitable center? She thinks perhaps she could if she increased the student-teacher ratio, which is currently five students to one teacher. (Government standards for a center such as this set a maximum of 10 students per teacher.) She refuses to increase the ratio to more than six-to-one. ‘‘If you increase the ratio to more than six-to-one, the children don't get enough attention. In addition, the demands on the teacher are far too great.'' She does not hire part-time teachers.
Mooring rents the space for her center in the basement of a church for $900 per month, including utilities. She estimates that supplies, snacks, and other nonpersonnel costs are $80 per student per month. She charges $380 per month per student. Teachers receive $1,200 per month, including fringe benefits. She has no other operating costs. At present, she cares for 30 students and employs six teachers.
a. What is the present operating profit per month of the Kids Education Center before Ms. Mooring's salary?
b. What is (are) the break-even point(s), before Ms. Mooring's salary, assuming a student- teacher ratio of 6:1?
c. What would be the break-even point(s), before Ms. Mooring's salary, if the student- teacher ratio increased to 10:1?
d. Ms. Mooring has an opportunity to increase the student body by six students. She must take all six or none. Should she accept the six students if she wants to maintain a maximum student-teacher ratio of 6:1?
e. (Continuation of part d.) Suppose that Ms. Mooring accepts the six children. Now she has the opportunity to accept one more, which requires hiring one more teacher. What would happen to profit, before her salary, if she accepts one more student?
|
Why do you think this is the case
: Transatlantic air travel in business class has an estimated elasticity of demand of 0.40 less than transatlantic air travel in economy class, with an estimated price elasticity of 0.62. Why do you think this is the case?
|
|
Identifying an ethical problem
: Phase One: Identifying an Ethical Problem- Using the format from the Ethicist column in The New York Times (and discussed in the first week's Professional Practices), identify two ethical problems and write them out, remaining neutral in presentin..
|
|
Determine the overall cost of and time for the project
: Construct a project schedule to determine the overall cost of and time for the project. Identify the finish date. Calculate the total cost. scribe the process that was followed to review and approve the change request
|
|
What is the cost of obtaining financing with sale-leaseback
: How much would the corporation receive from a sale-leaseback of the property? What is the cost of obtaining financing with a sale-leaseback? What is the return from continuing to own the property
|
|
What is present operating profit per month of kids education
: What is the present operating profit per month of the Kids Education Center before Ms. Mooring's salary? What is (are) the break-even point(s), before Ms. Mooring's salary, assuming a student- teacher ratio of 6:1?
|
|
Write report to the dean that evaluates quality of analysis
: Write a report to the dean that evaluates the quality of this analysis. In particular, focus on concerns about the accuracy of the data and the limitations of cost-volume-profit analysis.
|
|
A child pulls a wagon at a constant velocity
: A child pulls a wagon at a constant velocity along a levelsidewalk the child does this by applying a 22 newton force to the wagon handle which is incline at 35 degrees to the sidewalk
|
|
Why do management concentrated on reducing fixed costs
: Why do you think management concentrated on reducing fixed costs to put Auto, Inc. above its break-even point? As a shareholder of Auto, Inc., what concerns might you have about the company's massive cost cutting?
|
|
Directed in the positive x direction
: A charge of -4.6 µC is located at the origin; a charge of 6.13 µC is located at x = 0.2 m, y = 0; a third charge Q is located at x = 0.32 m, y = 0. The force on the 6.13 µC charge is 564.3 N, directed in the positive x direction.
|