Joyful Journeys Music School provides private music lessons for elementary stude
ID: 2586759 • Letter: J
Question
Joyful Journeys Music School provides private music lessons for elementary students. Its operating costs are as follows:
Rent on facilities $2,200 per month
Advertising $274 per month
Instrument Rent $750 per month
Teaching Instruction $40 per student
Books $5 per student
Other Costs $3 per student
Joyful Journeys charges $100 per student per month.
Instructions
(a) Determine the company’s break-even point in (1) number of students taught per month and (2) dollars.
(b) Joyful Journeys has just received notice that the rent on their facilities will be increasing by $500 per month and the instrument rent will also be increasing $20 per month. (1) Determine the company’s break-even point in the number of students taught per month based on the new information. (2) Determine the amount to charge per student assuming that Joyful Journeys does not increase the number of students taught.
Explanation / Answer
a). 1). Solution :- Contribution per student taught per month = 100 - (40 + 5 + 3)
= 100 - 48
= $ 52.
Break even point (in terms of the number of students taught per month) = Fixed costs / Contribution per student taught per month.
= (2200 + 274 + 750) / 52
= 3224 / 52
= 62 students.
a). 2). Solution :- Break even point (in dollar terms) = Break even point (in terms of the number of students taught per month) * Service revenue to be charged from every student per month.
= 62 * 100
= $ 6200.
Conclusion :-
Break even point (in terms of number of students taught per month) 62 Students Break even point (in the dollar terms) 6200.Related Questions
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