Ch $22$ Discussion

Variable Costs $$200$ per child per month

Fixed Costs $$3200$

Revenues:

Children charged $$600$ per month

The facility can care for $32$ children, but currently only $10$ children are served.

The owner desires to double the number of children served each month to $20$ students. To achieve this the owner is willing to spend an additional $$1000$ per month on advertising.

Required:

Prepare a report to the manager responding to each of her questions. Use cost volume profit concepts in developing your response.

What is the Company's current monthly profit? $($SHOW YOUR CALCULATIONS!$)$

What will their monthly profit be if they lose two children? What is the significance of only serving $8$ students? $($SHOW YOUR CALCULATIONS!$)$

If additional advertising is purchased, and the number of children doubles, what is the new profit? What is the new breakeven point? $($SHOW YOUR CALCULATIONS!$)$

Should the owner spend the additional $$1,000?$