Problem 11-25 Part 1 Webster Training Services (WTS) provides instruction on the use of omputer software for the employees of its corporate clients. It offers courses in the clients' offices on the clients' equip. The only major expense WTS incurs is instructor salaries; it pay instructors 5,000 per course taught. WTS agreed to offer a course of instructon to the employees of Chambers Inc. at the price of 400 per student. Chambers estimated that 20 students would attend the course. Base your answer on the following info. a. relative to the number of students in a single course, is the cost of instruction a fixed or a variable cost? b. Determine the profit, assuming that 20 students attend the course. c. Determine the profit, assuming a 10% increase in enrollment(enrollment increases to 22 students) What is the percentage change in profitibility? d. Determine the profit, assumning a 10% decrease in enrollment (18 students) What is the percentage change in profitability? e. Explain why a 10% shift in enrollment produces more than a 10% shift in profitibility. Use the term that identifies this phenomenon. Problem 11-28 Inman Manufacturing Company makes a product that it sells for 60 per unit. The company incurs variable manuf. cost of 24 per unit. Variable selling expenses are 12 per unit, annual fixed manuf. costs are 189,000 and fixed selling and admin costs are 141,000 per year. Determine the break even point in units and dollars using the following approaches. a. Equation method. b. Contribution margin per unit. c. Contribution margin ratio. d. Confirm your results by preparing a contribution margin income statement for the break even sales volume

## This question was asked on Jan 07, 2013.

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