Question

Major E. has just opened a cooking school focusing on basic meals for new cooks. Each student pays $15 per class and receives all the ingredients necessary to prepare dinner using the recipes demonstrated in the class. Major’s cost to provide the ingredients is $6 per student for each class. Major employs two assistants and pays each of them $1,200 per month. Major’s monthly salary is $1,800. The depreciation on equipment is $1,000 per month and utilities and insurance are $240 per month. Next month, Major plans to earn net income of $1,760. How many students does Major plan to enroll next month?

Answer 1

Answer:

It will need to collect 800`s $15 class

Assuming 4 clases per month

200 student

Explanation:

$Sales \: Revenue - Variable \: Cost = Contribution \: Margin$

15 - 6 = 9 Contribution Margin

Fixed Cost

2 employee 2,400

mayor salari 1,800

equipment dep 1,000

utilities 240

Total fixed 5,440

$\frac{Fixed\:Cost + Target\: Profit}{Contribution \:Margin \:Ratio} = Sales\: to\: Profit{dollars}$

(5,440+1,760)/9 = 800