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Problem 11-25A (Algo) Part 2 The instructor has offered to teach the course for a percentage of tuition fees. Specifically, she wants $250 per person attending the class. Assume that the tuition fee remains at $470 per student. f. Is the cost of instruction a fixed or a variable cost? g. Determine the profit, assuming that 20 students take the course. h. Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 22 students). What is the percentage change in profitability? i. Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 18 students). What is the percentage change in profitability?

Problem 11-25A (Algo) Part 2 The instructor has offered to teach the course for a percentage of tuition fees. Specifically, she wants $250 per person attending the class. Assume that the tuition fee remains at $470 per student. f. Is the cost of instruction a fixed or a variable cost? g. Determine the profit, assuming that 20 students take the course. h. Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 22 students). What is the percentage change in profitability? i. Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 18 students). What is the percentage change in profitability?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Problem 11-25A (Algo) Effects of Operating Leverage on Profitability LO 11-1, 11-2** *The following information applies to the questions displayed below.* Franklin Training Services (FTS) provides instruction on the use of computer software for the employees of its corporate clients. It offers the courses in the clients' offices on the clients' equipment. The only major expense FTS incurs is instructor salaries; it pays instructors $5,300 per course taught. FTS recently agreed to offer a course of instruction to the employees of Novak Incorporated at a price of $470 per student. Novak estimated that 20 students would attend the course. Base your answers on the preceding information. --- **Problem 11-25A (Algo) Part 2** The instructor has offered to teach the course for a percentage of tuition fees. Specifically, she wants $250 per person attending the class. Assume that the tuition fee remains at $470 per student. f. Is the cost of instruction a fixed or a variable cost? g. Determine the profit, assuming that 20 students take the course. h. Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 22 students). What is the percentage change in profitability? i. Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 18 students). What is the percentage change in profitability? --- *Interact with this content by entering your answers in the tabs below.* - **Required F**: Specify if the cost of instruction is fixed or variable. - **Required G**: Calculate the profit with 20 students enrolled. The text inside the interactive segment asks: "Is the cost of instruction a fixed or a variable cost?" With the option to input an answer directly. (Note: There are no graphs or diagrams included in this image.)
Transcribed Image Text:**Problem 11-25A (Algo) Effects of Operating Leverage on Profitability LO 11-1, 11-2** *The following information applies to the questions displayed below.* Franklin Training Services (FTS) provides instruction on the use of computer software for the employees of its corporate clients. It offers the courses in the clients' offices on the clients' equipment. The only major expense FTS incurs is instructor salaries; it pays instructors $5,300 per course taught. FTS recently agreed to offer a course of instruction to the employees of Novak Incorporated at a price of $470 per student. Novak estimated that 20 students would attend the course. Base your answers on the preceding information. --- **Problem 11-25A (Algo) Part 2** The instructor has offered to teach the course for a percentage of tuition fees. Specifically, she wants $250 per person attending the class. Assume that the tuition fee remains at $470 per student. f. Is the cost of instruction a fixed or a variable cost? g. Determine the profit, assuming that 20 students take the course. h. Determine the profit, assuming a 10 percent increase in enrollment (i.e., enrollment increases to 22 students). What is the percentage change in profitability? i. Determine the profit, assuming a 10 percent decrease in enrollment (i.e., enrollment decreases to 18 students). What is the percentage change in profitability? --- *Interact with this content by entering your answers in the tabs below.* - **Required F**: Specify if the cost of instruction is fixed or variable. - **Required G**: Calculate the profit with 20 students enrolled. The text inside the interactive segment asks: "Is the cost of instruction a fixed or a variable cost?" With the option to input an answer directly. (Note: There are no graphs or diagrams included in this image.)
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