Easylearn Ltd provide expert tutoring on a range of subjects. Next year’s budget
ID: 2476226 • Letter: E
Question
Easylearn Ltd provide expert tutoring on a range of subjects. Next year’s budget shows the following expected figures:
Accounting Maths English French
Expected hours of work 2,500 3,000 3,500 1,000
Charge per hour $40 $50 $45 $35
Variable cost per hour $10 $15 $9 $10
Fixed costs for the year are expected to be $198,600.
(a) Calculate the total number of hours Easylearn Ltd will have to work to break even, assuming the above mix of tutoring hours.
(b) Calculate the contribution from each subject and in total at break-even point.
(c) Using the same mix as above prepare a Profit Statement for Easylearn plc to earn a profit of $100,000.
(d) The actual hours provided during the year turned out to be:
Accounting 1,500
Maths 1,000
English 4,500
French 3,000
Calculate the break-even number of hours
Explanation / Answer
(a) Tutoring hours: Accounting 2,500 25%
Maths 3,000 30%
English 3,500 35%
French 1,000 10%
10,000 100%
Contribution per hour – Accounting $30
– Maths $35
– English $36
– French $25
Weighted Average Contribution per hour
= ($30 ´ 25%) + ($35 ´ 30%) + ($36 ´ 35%) + ($25 ´ 10%)
= $7.50 + $10.50 + $12.60 + $2.50
= $33.10
B/E Point (hours) =
= 6,000
(b) Accounting Maths English French Total
Hours of 1,500 1,800 2,100 600 6,000
Tutoring
Contribution 1,500 ´ 1,800 ´ 2,100 ´ 600 ´
$30 $35 $36 $25
$45,000 $63,000 $75,600 $15,000 198,600
(c) Contribution required = $198,600 + $100,000
= $298,600
Number of hours required =
= 9,021 (nearest hour)
Hours per subject: Accounting 25% – 2,255
Maths 30% – 2,706
English 35% – 3,158
French 10% – 902
Profit Statement for Easylearn Ltd
Accounting Maths English French Total
$ $ $ $ $
Sales 90,200 135,300 142,110 31,570 399,180
Variable Costs 22,550 40,590 28,422 9,020 100,582
Contribution 67,650 94,710 113,688 22,550 298,598
less: Fixed Costs 198,600
Profit 99,998
(d) Accounting 1,500 15%
Maths 1,000 10%
English 4,500 45%
French 3,000 30%
10,000 100%
Weighted Average Contribution per unit
= (15% ´ $30) + (10% ´ $35) + (45% ´ $36) + (30% ´ $25)
= $4.50 + $3.50 + $16.20 + $7.50
= $31.70
B/E Point (hours) = 198600/31.7
= 6,265
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