Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 3 - Cost-Volume-Profit Analysis - Assignment Material - Problems - Page 99: 3-34(3)

Answer

Increase in Fees per Child = (700 + 1,100) $\div$ 36 children ≈ 47.22 KinderKids should increase fees per child by approximately 47.22 to meet the target operating income of 5,000 per month.

Work Step by Step

Increase in Fees per Child = (Increase in Fixed Costs + Increase in Field Trip Costs) $\div$ Number of Children Increase in Fixed Costs = New Rent - Old Rent = 2,200 - 1,500 = 700$ Increase in Field Trip Costs = 1,100
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