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Training recently started a business providing training events for corporations

Management

Training recently started a business providing training events for corporations. In order to better understand the profitability of the? business, the owners asked you for an analysis of costs—what costs are? fixed, what costs are? variable, and so? on, for each training session. You have the following cost? information:

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?(Click the icon to view the? information.)

Trainer: $16,000 per session

?Materials: $2,900 per session and $33 per attendee

Catering Costs? (subcontracted):

?Food: $50 per attendee

?Setup/cleanup: $26 per attendee

Fixed? fee: $8,000 training session

Big Sky Training is pleased with the service they use for the catering and have allowed them to place brochures on each dinner table as a form of advertising. In? exchange, the caterer gives Big Sky Training a $1,400 discount per session.

 

Requirement 2. Suppose 150 persons attend the next event. What is Big Sky ?Training's total net cost and the cost per? attendee? ?(Round your answers to the nearest? cent.)

For 150 attendees, the total cost will be ?

and the cost per attendee will be?

 

.

Requirement 3. Suppose instead that 225 persons attend. What is Big Sky ?Training's total net cost and the cost per attendee. ?(Round your answers to the nearest? cent.)

For 225 attendees, the total cost will be?

 

and the cost per attendee will be?

 

.

Requirement 4. How should Big Sky Training charge customers for their? services? Explain briefly.

Big Sky Training should charge customers based on ? Flat fee of $15,000 plus margin for the materials or the number of attendees or the type of event ?

 

As the number of ? Attendees or events ?

 

?increase, Big Sky Training could offer price discounts because ? ? photo

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1)    
Variable cost per attendee:    
Materials 33  
Food 50  
Setup/Cleanup 26  
Total Variable cost Per Attendee 109  
     
Fixed Cost:    
Materials 2900  
Trainer 16000  
Catering 8000  
Offset for brochures -1400  
Total Fixed Cost 25500  
     
2)     
Total Net Cost = Variable Cost + Fixed Cost =  (150 * 109 ) +25,500 $41,850.00   
Cost per Attendee ($41,850/150 persons) $279.00  per attendee
     
3)    
Total Net Cost = Variable Cost + Fixed Cost =  (225 * 109 ) +25,500 $50,025.00   
Cost per Attendee ($50,025/225 persons) $222.33  per attendee

 

4) Big Sky Training should charge customers based on Cost plus pricing method As the number of attendees increase, national Training could offer price discounts because its fixed costs would be spread over a larger number of attendee.