Cooper Training Services (CTS) provides instruction on the use of computer software for the employees of its corportate clients. It offers courses in the clients' offices on the clients' equipment. The only major expense CTS incurs is instructor salaries; it pays instructors $3,600 per course taught. CTS recently agreed to offer a course of instruction to the employees of Akers Incorporated at a price of $340 per student. Akers estimated that 20 students would attend the course.Base your answer on the preceding information.
Required
a. Relative to the number of students in a single course 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 20% increase in enrollment (i.e. enrollment increases to 24 students). What is the percentage change in profitability?
d. Determine the profit, assuming a 20% decrease in enrollment (i.e., enrollment decreases to 16 students). What is the precentage change in profitability?
e. Explain why a 20% shift in enrollment produces more than a 20% shift in profitability. Use the term that identifies this phenomenon.