Cost	Amount
Teacher wage	$ 20	per class
Website hosting fee	15	per month
Lease cost for video/computer equipment	75	per month
Video editor/website designer payment	500	per month
Rent on facility	250	per month
Advertising*	60	per month

Currently, susan offers 30 classes a month. All classes are pre-recorded and then posted to her website. Classes are 50-minutes in length. Patrons have access to any of the recordings, though Sarah does recommend new clients progress through the videos in the order they are presented. She is thinking when she turns this into a for-profit business, she would a monthly option for her customers. This monthly rate would allow customers to access all the months videos. Sarah currently has 40 loyal customers and would like to earn $1,000 a month in profit to start.

Requirements:

Sarah has the following questions for you:

1. What are Sarahs variable costs? Fixed costs? How do you know?
2. How does your answer in number 1, regarding Sarahs cost structure, impact her business?
3. What monthly price should she set for her customers?
4. What is Sarahs break-even point in customers? Do you think Sarahs chance of reaching this many customers is reasonable? Prove your break-even point by preparing a Contribution Margin Income Statement.
5. How many customers must Sarah take on to achieve her goal of $1,000 per month? Prove your answer with a Contribution Margin Income Statement.
6. Identify two concerns you have about Sarahs business. Support your concerns with data or independent research.
7. Provide Sarah with two recommendations for her business. Support your recommendations with data or independent research and detail any calculations to show the impact of your implemented recommendations.