Reference no: EM132540479

A group of students at a local university have decided to establish a new student society dedicated to providing information on how students, faculty and staff can become more mindful. In psychology, mindfulness is the process of bringing one's attention to the present moment with an overall effect of reducing ones' sense of being overwhelmed when thinking about the past and the future. This new society will operate as a non-profit organization and intends to develop professional videos featuring speakers who will talk about mindfulness-related topics.

To produce the videos, the students have contracted a local company. To finish a series of videos for one year, the production company requires the student society to make monthly payments of $400. Each video will feature one speaker who will be paid $180 per video by the student society. The society also expects to incur advertising expenses of $100 per video.

Since organizing the speakers and collaborating with the production company will be effortful, the society has decided to compensate the head of the society at a cost of $3,300 per year. To fund the videos, the society will sell tickets and expects to raise $450 per video. Additionally, the society expects to raise $3,000 per year in donations. Required:

Question (A) If the society just breaks even, how many videos does it need develop per year?

Question (B) If demand for the video's is strong enough and the society decides to hire an advertising director at a cost of $2,550 per year, what would be the breakeven point?

Question (C) If the advertising director (mentioned in (B)) decides that the society should develop 41 video's per year, what would be the annual operating income/loss?

Question (D) The university administration has expressed support for the proposed student society and has offered to provide the society with a grant of $1,700 to go toward the cost of operations. If the society decides to hire the advertising director (mentioned in (B)) and receives the grant, what would be the breakeven point?

Question (E) How does Cost-Volume-Profit (CVP) analysis and breakeven analysis help managers? In your response, feel free to discuss information provided in the case.