Product Costing and C-V-P Analysis
Wakefield, Inc., offers a CPA review course in cities throughout the eastern United States. Wakefield hires local CPAs to do the teaching. Each instructor is paid $120 an hour to teach the course; a course consists of 12 weeks of instruction with sessions taking place four evenings a week for two hours at each session. The other instruction costs to Wakefield are to pay for hotel conference rooms to host the course. Generally, Wakefield pays the hotel $625 per evening to rent a conference room. Also, tuition for the course includes all course materials, which cost the company $180 for each student.
1. What is the product cost of providing one evening of instruction for all students?
2. What is the product cost of training a student over the entire course (there are 75 students in this particular course)?
3. Assuming that Wakefield charges each student $1,200 for the course, how many students would be required to break even on this course?
The solution contains product Costing and C-V-P Analysis. The product costs for each student is determined.