Question

Required information [The following information applies to the questions displayed below.] Finch Training Services (FTS) provides instruction on the use of computer software for the employees of its corporate clients. It offers courses in the clients' offices on the clients' equipment. The only major expense FTS incurs is instructor salaries, it pays instructors $5,700 per course taught. FTS recently agreed to offer a course of instruction to the employees of Novak Incorporated at a price of $460 per student. Novak estimated that 20 students would attend the course. Base your answers on the preceding information. 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 Required B Required C Required D 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 Required A Required BΣ .

Answer 1

A. the cost of instructor is fixed cost per course. irrespective of number of students the cost of instructor will remain $5700

b.

sales revenue	9200	[20students*460]
Less: instructor cost	5700
net income	3500$

c.

sales revenue	10120	[22students*460]
Less: instructor cost	5700
net income	4420$

% change = 4420-3500 /3500

=26.29%

D.

sales revenue	8280	[18students*460]
Less: instructor cost	5700
net income	2580$

% CHANGE = 2580-3500/3500

= -26.29%