VVH Training is a company that provides expert training sessions on how to run your business and make it profitable. They offer these training sessions in their offices and offer catering services during the sessions. You have been hired to complete a profitability analysis and you decided to start by completing a cost analysis of the business, in order to figure out for each training sessions, what costs are fixed and what costs are variable. You were able to gather the following information about the associated costs: Instructor: $11,000 per session Training Material: $2,500 per session and $35 per attendee Catering Services: Food: $75 per attendee Setup/cleanup: $25 per attendee Fixed fee: $5,000 per training session The catering company has also offered VVH Training a 1,000$ discount per session, if the
VVH Training is a company that provides expert training sessions on how to run your business and make it profitable. They offer these training sessions in their offices and offer catering services during the sessions.
You have been hired to complete a profitability analysis and you decided to start by completing a cost analysis of the business, in order to figure out for each training sessions, what costs are fixed and what costs are variable.
You were able to gather the following information about the associated costs:
Instructor: $11,000 per session
Training Material: $2,500 per session and $35 per attendee
Catering Services:
|
Food: $75 per attendee |
|
Setup/cleanup: $25 per attendee |
|
Fixed fee: $5,000 per training session |
The catering company has also offered VVH Training a 1,000$ discount per session, if they are willing to leave their brochures on the dinner table as a form of advertising. VVH has accepted the offer saying that it is a no-brainer
Required:
- plot a graph that shows what are the fixed, variable, and total costs for each training session in terms of the number of guests.
- What is the total cost and the cost per guest, if 100 people attend?
- What is the total cost and the cost per guest, if 175 people attend?
- How should VVH price their services? Explain.
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