5-38 Advertising Expenditures and Nonprofit Organizations Many colleges and universities have been extensively advertising their services. For example, a univ sity in Philadelphia used a biplane to pull a sign promoting its evening program, and one in Mississippi designed bumper stickers and slogans as well as innovative programs. Suppose Hilliard College charges a comprehensive annual fee of $14,800 for tuition, ro and board, and it has capacity for 2,000 students. The admissions department predicts enrollment of 1,700 students for 20X1. Costs per student for the 20X1 academic year are as follows: Variable Fixed Total Educational programs $5,200 $ 3,900 $ 9,100 Room 1,100 2,300 3,400 Board 2,500 500 3,000 $8,800 $ 6,700 $15,500 *Based on 1,700-2,000 students for the year. The assistant director of admissions has proposed a 2-month advertising campaign using radio and television advertisements, together with an extensive direct mailing of brochures. 1. Suppose the advertising campaign will cost $1.41 million. What is the minimum number of additional students the campaign must attract to make the campaign break even? 2. Suppose the admissions department predicts that the campaign will attract 335 additional students. What is the most Hilliard should pay for the campaign and still break even? 3. Suppose a 3-month (instead of 2-month) campaign will attract 440 instead of 335 additional students. What is the most Hilliard should pay for the 1-month extension of the campaign and still break even?
5-38 Advertising Expenditures and Nonprofit Organizations Many colleges and universities have been extensively advertising their services. For example, a univ sity in Philadelphia used a biplane to pull a sign promoting its evening program, and one in Mississippi designed bumper stickers and slogans as well as innovative programs. Suppose Hilliard College charges a comprehensive annual fee of $14,800 for tuition, ro and board, and it has capacity for 2,000 students. The admissions department predicts enrollment of 1,700 students for 20X1. Costs per student for the 20X1 academic year are as follows: Variable Fixed Total Educational programs $5,200 $ 3,900 $ 9,100 Room 1,100 2,300 3,400 Board 2,500 500 3,000 $8,800 $ 6,700 $15,500 *Based on 1,700-2,000 students for the year. The assistant director of admissions has proposed a 2-month advertising campaign using radio and television advertisements, together with an extensive direct mailing of brochures. 1. Suppose the advertising campaign will cost $1.41 million. What is the minimum number of additional students the campaign must attract to make the campaign break even? 2. Suppose the admissions department predicts that the campaign will attract 335 additional students. What is the most Hilliard should pay for the campaign and still break even? 3. Suppose a 3-month (instead of 2-month) campaign will attract 440 instead of 335 additional students. What is the most Hilliard should pay for the 1-month extension of the campaign and still break even?
Chapter2: Income Tax Concepts
Section: Chapter Questions
Problem 19P
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Transcribed Image Text:sity in Philadelphia used a biplane to pull a sign promoting its evening program, and one in Mississippi
you
5-38 Advertising Expenditures and Nonprofit Organizations
Many colleges and universities have been extensively advertising their services. For example, a upiu
sity in Philadelphia used a biplane to pull a sign promoting its evening program, and one in Mississin
designed bumper stickers and slogans as well as innovative programs.
Suppose Hilliard College charges a comprehensive annual fee of $14,800 for tuition, roo
and board, and it has capacity for 2,000 students. The admissions department predicts enrollment of
1,700 students for 20X1. Costs per student for the 20X1 academic year are as follows:
univer-
Variable
Fixed
Total
Educational programs
$5,200
$ 3,900 $ 9,100
Room
1,100
2,300
3,400
Board
2,500
500
3,000
$8,800
$ 6,700*
$15,500
*Based on 1,700-2,000 students for the year.
The assistant director of admissions has proposed a 2-month advertising campaign using radio
and television advertisements, together with an extensive direct mailing of brochures.
1. Suppose the advertising campaign will cost $1.41 million. What is the minimum number of
additional students the campaign must attract to make the campaign break even?
2. Suppose the admissions department predicts that the campaign will attract 335 additional students.
What is the most Hilliard should pay for the campaign and still break even?
3. Suppose a 3-month (instead of 2-month) campaign will attract 440 instead of 335 additional
students. What is the most Hilliard should pay for the 1-month extension of the campaign and still
break even?
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