MidWest University offers executive MBA programs in Singapore. The dean has charged you with estimating the cost
Question:
MidWest University offers executive MBA programs in Singapore. The dean has charged you with estimating the cost of offering the program. You identify the following:
Required: a. Prepare a statement that shows (a) the contribution margin, (b) the program margin, and (c) the profit margin (after including allocated costs) for the Singapore program. Identify decisions for which (a) the contribution margin would be the focus and (b) the program margin is the relevant amount. b. A local firm in Singapore has offered to enroll three of its managers in the program but only if the program reduces the fee to $25,000 per participant. Estimate the net increase in profit if the university accepts thisoffer.
Contribution Margin Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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Item Detail Tuition revenue Partner fee $35,000 per participant. 40 participants expected. The partner in Singapore takes 35% of revenue. In return, the partner provides all marketing, student recruitment, local logistics, and classrooms $20,000 paid as salary to instructor. Travel reimbursed on actual cost basis, averaging $4,500 per trip. The program comprises 16 classes These costs amount to $200 per student per course. Instructor costs Textbooks, copies, and so on Administration Between them, he dean and the associate dean make three trips costs per year (cost: $6,500 per trip). They also estimate that the work at the U.S. location accounts for 1.5 full-time equivalent (FTE) employees (average salary: $54,000). The dean estimates that she spends 5% of her time on this program and the associate dean spends 10% of his time on the program. The dean earns $350,000, and the associate dean $225,000 per year. costs
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a The following is the required statement Singapore Executive MBA Program MidWest University Tuition revenue 1400000 40 students 35000 Partner fees 49...View the full answer
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