Question: In this capacity she runs a center in Kirkland Washington

In this capacity, she runs a center in Kirkland, Washington, that provides training to employees of companies that use Mayfield’s inventory control, customer management, and accounting software products. Her group employs a receptionist and an office manager/bookkeeper, and she has arrangements with several part-time trainers who are hired on an as-needed basis.
(They are all retired employees of Mayfield Software.) Trainers are paid $4,000 per daylong class. Mayfield is a decentralized company, and Marie is given considerable authority to advertise and conduct classes as she sees fit.

a. As indicated, the training group suffered a loss in 2010. Thus, unbeknownst to Marie, Mayfield management is considering shutting down the training center. Given the results of 2010, what would be the effect on Mayfield Software’s total company profit in 2011 if the training center is closed at the start of the year?
b. Given the current room configuration and approach to allocation of central charges (20 percent of revenue), calculate the number of classes that must be offered (with an average enrollment of 20 students) for Marie’s group to break even on the Report of Operating Results.
c. Recalculate your answer to part b assuming Marie can lower the amount paid to instructors to $3,500 per class. Should Marie seriously pursue this option?
d. Mayfield Software is releasing version 4.0 of CustomerTrack in 2011.Marie believes that this will create a demand for 30 additional daylong classes with an average enrollment of 20 students per class. What effect will this have on “group profit” on Marie’s Report of Operating Results? Assume instructors will be paid $4,000 per class.

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