E21-37 using sensitivity analysis Intersection driving school charges $500 per s
ID: 2461541 • Letter: E
Question
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 carsRequirements 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. 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. 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.
Explanation / Answer
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The impact of Changes in the sales price: rise in sales price increases the contribution and lower the break even point and when there is a decrease in sales price, vice-versa.
The impact of Changes in the variable costs: rise in variable costs will decreases the contribution and raises the break even point and when there is a decrease in variable costs, vice-versa.
The impact of Changes in the fixed costs: rise in fixed costs will have no effect on the contribution, but and raise the break even point being contribution is constant and when there is a decrease in fixed costs and contribution is constant, it will decrease the break even point.
Sales Price $ Variable cost $ Fixed Cost $ contribution margin per unit Break Even Point in units a Breakeven point with no change in information 500 150 140000 350 140000/350 = 400 b Decrease sales price to $250 per student. 250 150 140000 100 1400 c Decrease variable cost to $100 per student 500 100 140000 400 350 d Decrease fixed costs to 122,500 500 150 122500 350 350Related Questions
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