Question

In: Accounting

Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $5,000...

Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $5,000 per course taught. Denton pays its instructors $250 per student enrolled in the class. Both universities charge executives a $450 tuition fee per course attended.


Required

A. Prepare income statements for Kenton and Denton, assuming that 20 students attend a course.

B. Kenton University embarks on a strategy to entice students from Denton University by lowering its tuition to $240 per course. Prepare an income statement for Kenton assuming that the university is successful and enrolls 40 students in its course.

C. Denton University embarks on a strategy to entice students from Kenton University by lowering its tuition to $240 per course. Prepare an income statement for Denton, assuming that the university is successful and enrolls 40 students in its course.

I NEED IT ANSWERED IN THIS FORMAT, FILL IN BLANKS

Problem 11-28

a.      N = Number of units to break-even point

Sales − Variable cost − Fixed cost = Desired Profit

          (Sales price x N) − (Variable cost per unit x N) = Fixed cost + Desired Profit

(Contribution margin per unit x N) = Fixed cost + Desired Profit

N = (Fixed cost + Desired Profit) ÷ Contribution margin per unit

N = ($               + $           ) ÷ [$       - ($     + $       )] =          Units

          Break-even point dollars =        Units x $        selling price per unit = $

b.      N = Number of units to break-even point

          N = (Fixed cost + Desired Profit) ÷ Contribution margin per unit

          N = ($            + $            ) ÷ [$        – ($       + $      )]

          N =          Units

          Break-even point dollars =    Units x $            selling price per unit = $

c.

Contribution Margin Income Statement

Sales ($         x           Units)

$               

Variable costs ($    x              )

Contribution margin

$              

Fixed costs

Net Income

$             

Solutions

Expert Solution

A.

Kenton University
Sales $           9,000 =450*20
Variable Costs $                  -  
Contribution Margin $           9,000
Fixed Costs $           5,000
Net Income $           4,000
Denton University
Sales $           9,000 =450*20
Variable Costs $           5,000 =250*20
Contribution Margin $           4,000
Fixed Costs $                  -  
Net Income $           4,000

B.

Kenton University
Sales $           9,600 =240*40
Variable Costs $                  -  
Contribution Margin $           9,600
Fixed Costs $           5,000
Net Income $           4,600

C.

Denton University
Sales $           9,600 =240*40
Variable Costs $        10,000 =250*40
Contribution Margin $             -400
Fixed Costs $                  -  
Net Income $             -400

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