Question:
Administrator salaries $400,000
faculty salaries $850,000
coaches salaries $80,000
medical,...benefits $600,000
insurance $60,000
mortgage/debt $40,000
materials cost for each student $500
1. Breakeven point (number of enrolled students needed) for this Academy, given this cost structure is: ____________students. (Be sure to show an outline of your calculations.)
Now assume that because enrollment has tapered off, your Board of Trustees has approved a $50,000 marketing budget to develop promotional materials and to hire a part-time recruiter. (Remember to include this cost from now on.) (Again, show an outline of your calculations.)
2. Your new B/E point is _________ students.
3. In other words, to cover this increase in promotion, you'll need another ______ students in order to breakeven.
Faculty salaries have been frozen for the past 4 years. They now indicate that they will strike if they are not given an immediate 3% pay increase. You believe that this should also be extended to the coaching staff, to head-off potential problems in that area. (Again, remember to include this cost from now on.) (Also again, show an outline of your calculations)
4. Rounding up to the nearest whole number, your new B/E point is _________ students.
5. Enrollment turns out to be 422 students. Therefore your academy has made profits of $__________.
To help defray the new marketing costs, you decide to raise your tuition from $5500 to $6000.
6. Rounding up to the nearest whole number, your new B/E point is _________ students. (Show an outline of your calculations).
7. Another question. what would you say if the academy chose to use an odd pricing strategy, pricing tuition at $5,999?
Your enrollment of 422 students (from part "4" above) drops 1 percentage point more than your tuition was raised (e.g., if tuition is raised 5%, enrollment drops 6%). Regrettably, school tuition appears to be far more elastic than expected.
8. Tuition was raised _____%.
9. Enrollment declines _____%.
10. Rounding up to the nearest whole number, enrollment is now ________ students.