The firm has three major departments: Recruitment, Training and Career Services. The Training Centre provides management training for employees of various businesses. Recruitment provides recruitment services and Career Services assists personnel with resumes and offers advice on career planning.
The Training Centre employs 2 administrative assistants, 1 training officer and Janice, the manager on a permanent basis. Part-time trainers are hired on an as-needed basis. Part-time trainers are paid $1500 per workshop. During 2008 the Training Centre conduction 200 workshops with 20 individuals in each. The charge per individual was $300. This is the maximum number of workshops that can be held in a year. Following are the results for 2008. Training Revenue (200 x 20 x $300) $1,200,000 Less Expenses: Trainer costs (200 x 2 x $1500) 600,000 Manager's Salary 120,000 Training officer 90,000 Administrative staff 80,000 Utilities/phone costs 20,000 Manuals for participants 120,000 Advertising costs 125,000 Postage & other miscellaneous costs 9,450 Total expenses $ 1,164,450 Income from operations $35,550 Common Allocated costs (10% of revenue) 120,000 Net Income or (loss) $(84,450) Required:
1. Given the allocated costs at 10% of revenue, calculate number of workshops that must be offered to break-even.
2. Re-calculate #2 above, assuming Janice can re-negotiate the part-time trainers' cost to $1000 per workshop.
3. With the increase in globalization and companies outsourcing many jobs, Janice thinks that, in addition to management training, the Training Centre should offer "second career" training. Janice feels that this will add 100 more workshops with an average enrollment of 15 participants at a cost of $200 each.
The rate per participant is based on the fact that a non-profit organization has offered its facilities, free of charge, to run the workshops. What effect will this have on the Training Centre profit?