Chapter 3, Problem 3.34P

1.

To determine

Break-Even Point:

Break-even point is a point of sales where company can cover all its variable and fixed costs. It is a point of sales where revenue generated is equal to the total costs. Thus, profit is zero at this level of sales.

To compute: Break-even point.

2.

To determine

To compute: Number of children required to achieve target operating income.

3.

To determine

To compute: Increase in fee per child to maintain the operating income of $5,000.