Squeaky Horn Case Essay

1216 WordsMar 23, 20135 Pages
Abbington Youth Center Background 1. Abbington Youth Center is a not-for-profit organization, which provides three high-quality programs: Infants and Toddlers Program, Preschool Program, and After-School Program. Targets are children up to three-years old, three to five-years old, and five to seven-years old. 2. Mark Thomas, assistant director of the Abbington Youth Center, instructs the program directors with his breakeven analysis. He calculated the following results by using average method: * Each student contributed $4,348 to fixed costs * 115 students are the breakeven point 3. The current Abbington’s programs enrollment is exactly at breakeven, so Mr. Thomas encourages the program directors to expand the size of…show more content…
This is quite similar to what Mark calculated in average method. However, it is more important to look at the breakeven point for each program. Currently, Infants and Toddlers Program has not only excelled its breakeven point by 7 students, but also reached its accommodation capacity. The enrollment of Preschool Program was already at breakeven, and it requires an additional $22,000 for teacher’s salary to increase 10 students. However, After-School Program needs another 6 students to have breakeven, and also an additional $25,000 is needed to add 15 more students. Table 2 uses this adjusted information to calculate a new breakeven point and surplus. In this case, the teacher should be considered as a fixed cost since the cost is not directly traced to each student. In other words, the cost will not change within a relative small range of students; for instance, there is no difference between teaching 10 students and 11 students. Moreover, the 5% price increase in educational supplies also should

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