Required Information

Problem $11-25$A $($Algo$)$ Effects of operating leverage on profitability LO $11-2$

The following information applles to the questions displayed below.$]$

Solomon Training Services $($STS$)$ provides instruction on the use of computer software for the employees of its corporate cllents. It offers courses in the cllents' offices on the cllents' equipment. The only major expense STS incurs is instructor salarles; It pays instructors $$5,600$ per course taught. STS recently agreed to offer a course of instruction to the employees of Novak Incorporated at a price of $$400$ per student. Novak estimated that $20$ students would attend the course.

Base your answers on the preceding information.

Problem $11-25$A $($Algo$)$ Part $1$

Required

a$.$ Relative to the number of students in a single course, Is the cost of Instruction a fixed or a variable cost?

b$.$ Determine the profit, assuming that $20$ students attend the course.

c$.$ Determine the profit, assuming a $10$ percent increase in enrollment $($I$.$e$.,$ enrollment increases to $22$ students$).$ What is the percentage change in profitability?

d$.$ Determine the profit, assuming a $10$ percent decrease in enrollment $($I$.$e$.,$ enrollment decreases to $18$ students$).$ What is the percentage change in profitability?

Complete this question by entering your answers in the tabs below.

Required $A$

Relative to the number of students in a single course, is the cost of instruction a fixed or a variable cost?

The cost of instruction is a