Question

Not-for-Profit Applications
Determine the solutions to each of the following independent cases:

(a.) Collings College has annual fixed operating costs of $20,000,000 and variable operating costs of $2,400 per student. Tuition is $12,000 per student for the coming academic year, with a projected enrollment of 2,000 students. Expected revenues from endowments and federal and state grants total $400,000. Determine the amount the college must obtain from other sources.
$Answer

(b.) The Collings College Student Association is planning a fall concert. Expected costs (renting a hall, hiring a band, etc.) are $15,000. Assuming 2,000 people attend the concert, determine the break-even price per ticket. How much will the association lose if this price is charged and only 1,500 tickets are sold? (Do not use a negative sign with your answer.)
$Answer

(c.) City Hospital has a contract with the city to provide indigent health care on an outpatient basis for $125 per visit. The patient will pay $10 of this amount, with the city paying the balance ($115). Determine the amount the city will pay if the hospital has 5,000 patient visits.
$Answer

(d.) A civic organization is engaged in a fund-raising program. On Civic Sunday, it will sell newspapers at $2.50 each. The organization will pay $1.75 for each newspaper. Costs of the necessary permits, signs, and so forth are $750. Determine the amount the organization will raise if it sells 3,000 newspapers.
$Answer

(e.) Christmas for the Needy is a civic organization that provides Christmas presents to disadvantaged children. The annual costs of this activity are $10,000, plus $20 per present. Determine the number of presents the organization can provide with $30,000.
Answer in presents

Answer 1

solution a)

amount the college must obtain from other sources[A-B]

$400,000

EXPLANATION:

Calculation of amount the college must obtain from other sources

Total Fixed Cost	$20,000,000
Variable Cost[$2400 x 2,000 students]	$48,00,000
Total Cost[A]	$248,000,00
Tution Fees[$12,000 x 2000 students]	$24,000,000
Expected revenues from endowments	$4,00,000
Total Revenue[B]	$244,000,00
amount the college must obtain from other sources[A-B]	$400,000

solution b) association lose if this price is charged and only 1,500 tickets are $3750

EXPLANATION:

berak even price per ticket = TOtal Cost / expected ticket to be sold

= $15,000 / 2000

= $7.5

total ticket sold =1500

total amount received = 1500 x $7.5 =$11,250

loss = $15,000 - $11,250 =$3,750

hence total loss = $3750

solution c) Cost to city = [ ($125 -$10) x 5000] = $575,000

solution d) the amount the organization will raise if it sells 3,000 newspapers IS $1500

EXPLANATION :

Revenue[$2.50 x 3,000]	7500
less variable cost [$1.75 x3000]	5250
contribution	2,250
less: Fixed Cost	750
profit	1500

Solution e)

Number of present[ $20,000/$20]

1000

EXPLANATION :

Available Funds	$30,000
less: fixed cost	$10,000
variable funds available	$20,000
variable cost per present	$20
Number of present[ $20,000/$20]	1000

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