Purchase Solution

Janice Colangelo Breakeven workshops variable vs fixed costs

Not what you're looking for?

Ask Custom Question

Janice Colangelo heads the Training Centre of the large HR Consulting firm EMT Consulting. The firm has three major departments: Recruitment, Training and Career Services.

The Training Centre provides management training for employees of various businesses. Recruitment provides recruitment services and Career Services assists personnel with resumes and offers advice on career planning.
The Training Centre employs 2 administrative assistants, 1 training officer and Janice, the manager on a permanent basis. Part-time trainers are hired on an as-needed basis. Part-time trainers are paid $1500 per workshop.

During 2008 the Training Centre conduction 200 workshops with 20 individuals in each. The charge per individual was $300. This is the maximum number of workshops that can be held in a year.

Following are the results for 2008.

Training Revenue (200 x 20 x $300) $1,200,000
Less Expenses:
Trainer costs (200 x 2 x $1500) 600,000
Manager's Salary 120,000
Training officer 90,000
Administrative staff 80,000
Utilities/phone costs 20,000
Manuals for participants 120,000
Advertising costs 125,000
Postage & other miscellaneous costs 9,450
Total expenses $ 1,164,450

Income from operations $35,550
Common Allocated costs (10% of revenue) 120,000
Net Income or (loss) $(84,450)

Required:

1. a. Classify each of the costs as variable or fixed.
Can you please help me to classify VC or FC?

2. Given the allocated costs at 10% of revenue, calculate the number of workshops that must be offered to break-even.

Can you please help me to the right formula for Question 2, I do not understand how to figure it out.

Purchase this Solution

Solution Summary

Your guidance is in excel, attached. It shows how each cost is classified, illustrates how to find the contribution margin per workshop and then walks you through the breakeven computation per workshop.

Solution provided by:
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution


Free BrainMass Quizzes
Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.