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This is a 'post-first' discussion forum. There are currently 8 threads in this forum. Join the conversation by creating a thread! FORUM Enter Chapter 18 in the Subject Box This is a required activity. You must post before viewing other student's posts. Answer the lead question. Additionally, expand the discussion by posting two responses to Chapter 18 Lead Question Discussion Post The Teddy Bear Company operates a day-care facility. The variable cost of operations is $200 per child per month. The fixed costs amount to $3,200 per month. Teddy child per month for their services. Athough the Teddy Bear Company has the capacity to handle 32 children, the current number of children served is only 10 The manager has operated the business out of her checkbook with few other accounting records. However, she is now desperate for some s $600 per What is the Teddy Bear Company's profit be if they lose two students? The manager believes that it may be possible to double their students from the current level of 10 st per month to 20 students per month. To n volume, the manager wll need to spend an additional $500 in fixed costs for promotional activities each month. Should the manager proceed Prepare a report to the manager responding to each of her questions. Use cost volume profit concepts in developing your response. e to search 4/12/2018

Explanation / Answer

When the number of students double the company is earning profit of $4,300 as the fixed cost gets allocated among 20 children in place of 10 students which helps in reducing the overall cost and thus maximising profits.

Profitability Report Current If loose 2 children Double Students No of students 10 8 20 Revenue per student $        600.00 $         600.00 $                     600.00 Total Revenue $    6,000.00 $     4,800.00 $               12,000.00 Variable cost $    2,000.00 $     1,600.00 $                 4,000.00 Fixed Cost $    3,200.00 $     3,200.00 $                 3,200.00 Additional promotional cost $                 -   $                  -   $                     500.00 Profit $        800.00 $                  -   $                 4,300.00

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