Question

Be Thin is a weight control center in Dallas. Clients are charged a fee of $ 800 for the weight control, counseling, and maintenance program. The average client spends 15 weeks in the program. In addition, each client must purchase a weekly food allowance at the center during the 15-week program. The average cost per client per week for food is $ 75. The variable costs per client per program average $ 80. This includes the cost of initial paperwork, insurance, and administrative costs. The variable costs per client per week aver-age $ 20. This includes the cost of food, utilities, and counselors’ salaries. The fixed costs of operations including rent, property insurance, and other fixed administrative costs amount to $ 9,000 per 15-week period. Required: Assume independent situations.
A. How many clients must Be Thin have each 15-week period to break even?
B. If Be Thin desires a before-tax profit of $ 8,000 per 15-week period, how many clients are needed?
C. If Be Thin has 50 clients each 15-week period, what is the profit before taxes?
D. If the program fee per client is increased by 15 percent, how many clients are needed to break even each 15-week period?
E. If the program fee per client is increased by 15 percent and the number of clients per 15-week period falls to 40, what is the profit before taxes each 15-week period? Should the program fee be in-creased? Explain.
F. If the variable costs per client per week are decreased by $ 2, how many clients are needed each 15-week period to break even?
G. If the variable costs per client per week are decreased as in part (F) and Be Thin has 55 clients each 15-week period, what is the before-tax profit each 15-week period?


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  • CreatedMarch 25, 2015
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