E21-37 using sensitivity analysis

Intersection driving school charges $500 per student to prepare and administer written and driving test. Variable cost of $150 per student including trainers wages study material and gasoline. Annual fixed cost of $140,000 include the training facility and fleet of cars

Requirements

1. For each of the following independent situations, calculate the contribution margin per unit and the break even point in units by the first referring to the original data provided:

a. Breakeven point with no change in information

b. Decrease sales price to $250 per student. 1b. 1,400 students

c. Decrease variable cost to $100 per student

d. Decrease fixed costs to 122,500.

2. Compare the impact of changes in the sales price, variable cost, and fixed costs on The contribution margin per unit and the break even point in units.