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Alameda Tile sells products to many people remodeling their homes and thinks that it could profitably offer courses on tile installation, which might also increase the demand for its products. The basic installation course has the following (tentative) price and cost characteristics.

Tuition $490per student

Variable costs (tiles, supplies, and so on)290per student

Fixed costs (advertising, salaries, and so on)100,000per year

a.What enrollment will enable Alameda Tile to break even?

-Break even point _______________ student

b.How many students will enable Alameda Tile to make an operating profit of $40,000 for the year?

-Number of students_______________

c.Assume that the projected enrollment for the year is 850 students for each of the following (considered independently):

1.What will be the operating profit (for 850 students)?

-Operating profit________________

2.What would be the operating profit if the tuition per student (that is, sales price) decreased by 9 percent? Increased by 25 percent?

-Sales price decrease by 9%

• operating profit( increased/decreased) by_____________

-Sales price increase by 25%

• operating price( increased/decreased ) by___________

3.What would be the operating profit if variable costs per student decreased by 15 percent? Increased by 16 percent?

-Variable costs per students decreased by 15%

• operating profit( increased/decreased )by_______________

variable costs per student increased by 16 percent

• operating profit( increased/decreased )by ________________

4.Suppose that fixed costs for the year are 10 percent lower than projected, whereas variable costs per student are 6 percent higher than projected. What would be the operating profit for the year?

operating profit_____________

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