Please answer (b) questions 1 and 2 Joyful Journeys Music School provides private music lessons for...

Please answer (b) questions 1 and 2

Joyful Journeys Music School provides private music lessons for elementary students. Its operating costs are as follows:

Rent on facilities $2,200 per month

Advertising $274 per month

Instrument Rent $750 per month

Teaching Instruction $40 per student

Books $5 per student

Other Costs $3 per student

Joyful Journeys charges $100 per student per month.

(a) Determine the company’s break-even point in (1) number of students taught per month and (2) dollars.

(b) Joyful Journeys has just received notice that the rent on their facilities will be increasing by $500 per month and the instrument rent will also be increasing $20 per month.

(1) Determine the company’s break-even point in the number of students taught per month based on the new information.

(2) Determine the amount to charge per student if Joyful Journeys does not increase the number of students taught.

Expert Solution



	Revenue Per Student	100.00
	Less: Variable Cost Per Student
	Teaching Instruction	40.00
	Books	5.00
	Other Costs	3.00
	Total Variable Cost	48.00
	Contribution Margin per Student	52.00

	Contribution Margin Ratio	52.00%	(52/100)

	Fixed Cost Per Month:
	Rent on Facilities	2200
	Advertising	274
	Instrument Rent	750
	Total Fixed Cost	3224


A	Break Even Point:

	Fixed Cost Per Month:	3224
	Contribution Margin Ratio	52.00%
	Break Even Point in Dollars	6200	(3224/52%)

	Fixed Cost Per Month:	3224
	Contribution Margin per Student	52.00
	Break Even Point in No of Student	62.00	(3224/52)


B	Fixed Cost Per Month:
	Rent on Facilities	2700
	Advertising	274
	Instrument Rent	770
	Revised Fixed Cost	3744

1	Revised Fixed Cost Per Month:	3744
	Contribution Margin per Student	52.00
	Break Even Point in No of Student	72.00	(3744/52)

2	Revised Fixed Cost Per Month:	3744
	Variable Cost (62*48)	2976
	Total Cost	6720
	Number of Students	62.00
	Charge Per Student	108.39	(6720/62)

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