Reference no: EM132984090

The state government has contacted a local nonprofit to add an additional ten new trainee spots, which would expand their current career training program to a total of sixty trainees. The average cost of the program is approximately $6,000 per trainee at the current level of service; however, the state is willing to pay $3,000 each for the ten extra spots, keeping the reimbursement rate for the fifty existing seats at $6,000 per trainee. The facility has the capacity for one hundred students and the number of existing teachers can handle sixty students. If this nonprofit accepts the state's offer:

Problem 1: What would the total revenue be for this program?

Problem 2: What would total expenses be for this program assuming that the average cost of $6,000 per trainee consists of $5,200 in fixed costs per student and $800 in variable costs per student? Your reading tells you that fixed costs are costs that do not change with increased volume up to a certain point. In this case, your fixed costs would not change until you were serving more than 100 students.

Problem 3: What would the net profit/loss be for this program?

Problem 4: Should this nonprofit accept the state's offer? Why or why not?