You run a school in Florida. Fixed monthly cost is $5,689.00 for rent and utilities, $5,807.00 is spent in salaries and$1,772.00 in insurance. Also every student adds up to $93.00 per month in stationary, food etc. You charge $710.00 permonth from every student now.You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,056.00,salaries to $6,925.00 and insurance to $2,056.00 per month. Variable cost per student will increase up to $177.00 permonth. However you can charge $1,053.00 per student. At what point will you be indifferent between your current modeof operation and the new option?Submit

The management uses indifferent points when the decision is to be taken regarding selecting between…

Answered: You gun a school in Florida. Fixed…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 16E

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You run a school in Florida. Fixed monthly cost is $5,220.00 for rent and utilities, $5,974.00 is spent in salaries and $1,762.00 in insurance. Also every student adds up to $102.00 per month in stationary, food etc. You charge $612.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $10,325.00, salaries to $6,544.00 and insurance to $2,172.00 per month. Variable cost per student will increase up to $157.00 per month. However you can charge $1,180.00 per student. At what point will you be indifferent between your current of operation and the new option? PLEASE SHOW EASIEST MOST SIMPLE WAY TO FIND THE ANSWER
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