Rohr Training Services (RTS) provides instruction on the use of computer softwar

Question

Rohr Training Services (RTS) 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 RTS incurs is instructor salaries; it pays instructors $4,000 per course taught. RTS recently agreed to offer a course of instruction to the employees of Basemera Incorporated at a price of $600 per student. Basemera estimated that 20 students would attend the course.

Required - What is listed in correct. BOLD and no numbers listed in the box is what I need help with

Part 1:

a.

Relative to the number of students in a single course, is the cost of instruction a fixed or a variable cost?

Fixed cost

Variable cost

b.

Determine the profit, assuming that 20 students attend the course.

Profit

$8,000

c-1.

Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 22 students).

Profit

$9,200

c-2.

What is the percentage change in profitability?

Change in profitability

%

d-1.

Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 18 students).

Profit

$6,800

d-2.

What is the percentage change in profitability?

Change in profitability

%

Part 2:

The instructor has offered to teach the course for a percentage of tuition fees. Specifically, she wants $360 per person attending the class. Assume that the tuition fee remains at $600 per student.

f.

Is the cost of instruction a fixed or a variable cost?

Fixed cost

Variable cost

g.

Determine the profit, assuming that 20 students take the course.

Profit

h-1.

Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 22 students).

Profit

h-2.

What is the percentage change in profitability?

Change in profitability

%

i-1.

Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 18 students).

Profit

i-2.

What is the percentage change in profitability?

Change in profitability

%

Part 3:

RTS sells a workbook with printed material unique to each course to each student who attends the course. Any workbooks that are not sold must be destroyed. Prior to the first class, RTS printed 20 copies of the books based on the client’s estimate of the number of people who would attend the course. Each workbook costs $30 and is sold to course participants for $50. This cost includes a royalty fee paid to the author and the cost of duplication.

k.

Calculate the workbook cost in total and per student, assuming that 18, 20, or 22 students attempt to attend the course. (Round "Cost per student" answers to 2 decimal places.)

Number of Students Attempting to Attend

18

20

22

Total cost of workbooks

Cost per student

l.

Classify the cost of workbooks as fixed or variable relative to the number of students attending the course.

Fixed cost

Variable cost

Rohr Training Services (RTS) 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 RTS incurs is instructor salaries; it pays instructors $4,000 per course taught. RTS recently agreed to offer a course of instruction to the employees of Basemera Incorporated at a price of $600 per student. Basemera estimated that 20 students would attend the course.

Explanation / Answer

Part 1 (a)

It is a variable cost since cost of instructor is incurred only if batches are conducted. In absence of batches, no salary has to be paid. Hence it’s a variable cost.

Part 1 (c-2)

% change             = (9200-8000)/8000

                                = 15%

Part 1 (d – 2)

% Change            = (6800 – 8000 )/8000

                                = -15%

Part 2 (f)

It is still a variable cost. Reason being the same, that salary has to be paid only in case if batches are conducted. No salary if no batches. Hence it’s a variable cost.

Part 2 (g)

Fees                                     600

Salary                                    -360

Profit per student            240

Profit for 20 students     = 20 * 240           

                                                = 4800

Part 2 (h-1)

Profit for 1 student         =240

Profit for 22 students     =22*240

                                                =5280

Part 2 (h-2)

Change in profit                                = (5280-4800)/4800

                                                =10%

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