Calculate the breakeven sales level

Assignment Help Finance Basics

Reference no: EM132183957

Question - A dance studio currently charges customers $25 for a half hour dance lesson. The studio employs a large number of dance instructors who are paid only for the lesons they give and receive $10 per lesson. The studio currently spends $18,000 per month for rent and could increase its dance space by renting an adjoining unit in its building for an additional $8,000 per month. The studio's current space is sufficient to give ten lessons per hour.

Currently the studio is open for forty hours during evenings and weekends and gives an average of 390 lessons per week during those times. However, during its thirty weekday hours, the studio gives only an average of 100 lessons per week.

a) Calculate the breakeven sales level for 20 percent decrease in the price of a dance lesson.

b) Calculate the breakeven sales level for a 20 percent dance lesson price decrease for only those lessons during the studio's weekday hours.

c) Use the breakeven calculations in parts a and b to explain why it would be preferable to restrict the price decrease to the studio's weekday hours. If the price decrease were restricted to the studio's weekday hours, what type of price-segmentation fence would be involved?

Reference no: EM132183957

Questions Cloud

Discuss about page replacement algorithms : In this phase we will add the Memory Management layer to our toy OS. We will implement demand-paging. Set page size to 8 words, therefore there are 32 frames.

Identify a company that has gone through a major change : Identify a company that has gone through a major change. This may be any company, in any market or industry, in any country, in any time period.

How long calculating takes under different methods : You want to evaluate difficulty of getting it to work and how long calculating takes under different methods and on different compute platforms.

How does each stage affects the HR function : What are the development stages a firm typically goes through as it grows internationally and how does each stage affects the HR function?

Calculate the breakeven sales level : Calculate the breakeven sales level for a 20 percent dance lesson price decrease for only those lessons during the studio's weekday hours

How can distance be beneficial to groups and teams : What are the major effects of the physical separation of group members? How can distance, in some cases, be beneficial to groups and teams?

Relationship between sustainability and human rights : what is the relationship between sustainability and human rights - Consider a key current technological example and apply to readings for this week to create

How much can jenna sell her treasury bond : Suppose Jenna's Treasury bond has a coupon interest rate of 6.5%, If she has just received the bond's 10th coupon, for how much can Jenna sell her treasury bond

How social media is affecting basic human social skills : How social media is affecting basic human social skills? Find three public websites that address the question, and record the following details.

User Account

All Pages