Eastern and Western Universities offer executive training courses to corporate clients. Eastern pays its instructors $5,985 per course taught. Western pays its instructors $285 per student enrolled in the class. Both universities charge executives a $370 tuition fee per course attended.
ACCY
6833
FALL
2015
QUESTION
# 1:
Eastern and Western Universities offer
executive training courses to corporate clients. Eastern pays its instructors
$5,985 per course taught. Western pays its instructors $285 per student
enrolled in the class. Both universities charge executives a $370 tuition fee
per course attended.
Part A.
Prepare income statements for Eastern
and Western, assuming that 21 students
attend a course.
University
Eastern
Western
Tuition revenue
$
$
Total cost of instruction
Net income (loss)
$
$
Part B
Eastern University embarks on a strategy
to entice students from Western University by lowering its tuition to $200 per
course. Prepare an income statement for Eastern, assuming that the university
is successful and enrolls 42 students in its course.
University
Eastern
Tuition revenue
$
Total cost of instruction
(fixed)
Net income (loss)
$
Part C.
Western
University embarks on a strategy to entice students from Eastern University
by lowering its tuition to $200 per course. Prepare an income statement for
Western, assuming that the university is successful and enrolls 42 students
in its course.
University
Western
Tuition revenue
$
Total cost of instruction
(variable)
Net income (loss)
$
Part D.
Prepare income statements for Eastern
and Western Universities, assuming that 14 students attend a course, assuming
that both universities charge executives a $370 tuition fee per course
attended.
University
Eastern
Western
Tuition revenue
$5,180
$5,180
Total cost of instruction
Net income (loss)
$
$
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