Question

Kenton and Denton Universities offer executive training courses to corporate clients. Kenton pays its instructors $6,384 per course taught. Denton pays its instructors $304 per student enrolled in the class. Both universities charge executives a $344 tuition fee per course attended.

quesion 5

Required

1. Prepare income statements for Kenton and Denton, assuming that 21 students attend a course.

2. Kenton University embarks on a strategy to entice students from Denton University by lowering its tuition to $224 per course. Prepare an income statement for Kenton assuming that the university is successful and enrolls 40 students in its course.

3. Denton University embarks on a strategy to entice students from Kenton University by lowering its tuition to $224 per course. Prepare an income statement for Denton, assuming that the university is successful and enrolls 40 students in its course.

5. Prepare income statements for Kenton and Denton Universities, assuming that 13 students attend a course, and assuming that both universities charge executives a $344 tuition fee per course attended.

Answer 1

A) Income statements for Kenton and Denton Universities assuming that 21 students attend a course, will be as under:

Income Statement
Particulars	Kenton University	Denton University
Revenue:
Tuition fee	$                           7,224	$                           7,224
Expenses:
Instructor's charges	$                           6,384	$                           6,384
Net Income	$                              840	$                              840

Net Income = Revenue - Expenses

Tuition fees for Kenton University = $ 344 * 21 students = $ 7,224

Tuition fees for Denton University = $ 344 * 21 students = $ 7,224

Instructor's charges for Kenton University = $ 6,384 per course

Instructor's charges for Denton University = $ 304 * 21 students = $ 6,384

B) If Kenton University lowers its tuition fees to $ 224 per course and enrolls 40 students in its course then income statement will be as under:

Particulars	Kenton University
Revenue:
Tuition fee	$                           8,960
Expenses:
Instructor's charges	$                           6,384
Net Income	$                           2,576

Net Income = Revenue - Expenses

Tuition fees for Kenton University = $ 224 * 40 students = $ 8,960

Instructor's charges for Kenton University = $ 6,384 per course

C) If Denton University lowers its tuition fees to $ 224 per course and enrolls 40 students in its course then income statement will be as under:

Particulars	Denton University
Revenue:
Tuition fee	$                           8,960
Expenses:
Instructor's charges	$                        12,160
Net Income	$                        (3,200)

Net Income = Revenue - Expenses

Tuition fees for Denton University = $ 224 * 40 students = $ 8,960

Instructor's charges for Denton University = $ 304 * 40 students = $ 12,160

D) Income statements for Kenton and Denton Universities assuming that 13 students attend a course, will be as under:

Particulars	Kenton University	Denton University
Revenue:
Tuition fee	$                           4,472	$                           4,472
Expenses:
Instructor's charges	$                           6,384	$                           3,952
Net Income	$                        (1,912)	$                              520

Net Income = Revenue - Expenses

Tuition fees for Kenton University = $ 344 * 13 students = $ 4,472

Tuition fees for Denton University = $ 344 * 13 students = $ 4,472

Instructor's charges for Kenton University = $ 6,384 per course

Instructor's charges for Denton University = $ 304 * 13 students = $ 3,952