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E21-22 Mi Tierra Driving School charges $200 per student to prepare and administer written and driving tests

E21-22 Mi Tierra Driving School charges $200 per student to prepare and administer written and driving tests
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Solution Guide / Answer Key:

ACCOUNTING
Accounting 7th Edition by Horngren, Harrison and Bamber
E21-22
Mi Tierra Driving School charges $200 per student to prepare and administer written and driving tests. Variable costs of $120 per student include trainers’ wages, study materials, and gasoline. Annual fixed costs of $50,000 include the training facility and fleet of cars. For each of the following independent situations, calculate the contribution margin per unit and the breakeven point in units:
1. Breakeven point with no change in information. (p. 1058)
2. Decrease sale price to $180 per student. (p. 1066)
3. Decrease variable costs to $110 per student. (pp. 1066–1067)
4. Decrease fixed costs to $40,000. (p. 1067)
Compare the impact of changes in the sale price, variable costs, and fixed costs on the contribution margin per unit and the breakeven point in units.

 

FILE: MS WORD

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