Compute the number of children who must be enrolled

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Question - CVP, target operating income, service firm. KinderKids provides daycare for children Mondays through Fridays. Its monthly variable costs per child are as follows: Lunch and snacks $100 Educational supplies 30 Other supplies (paper products, toiletries, etc.) 20 Total $150 Monthly fixed costs consist of the following: Rent $1,500 Utilities 150 Insurance 200 Salaries 1,700 Miscellaneous 450 Total $4,000 KinderKids charges each parent $400 per child per month.

1. Calculate the breakeven point.

2. KinderKids' target operating income is $5,000 per month. Compute the number of children who must be enrolled to achieve the target operating income.

3. KinderKids lost its lease and had to move to another building. Monthly rent for the new building is $2,200. At the suggestion of parents, KinderKids plans to take children on field trips. Monthly costs of the field trips are $1,100. By how much should KinderKids increase fees per child to meet the target operating income of $5,000 per month, assuming the same number of children as in requirement 2?

Reference no: EM132825491

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