Question
Not-for-Profit Applications
Determine the solutions to each of the following independent cases:
(a.) Collings College has annual fixed operating costs of $20,000,000 and variable operating costs of $2,400 per student. Tuition is $12,000 per student for the coming academic year, with a projected enrollment of 2,000 students. Expected revenues from endowments and federal and state grants total $400,000. Determine the amount the college must obtain from other sources.
$Answer
(b.) The Collings College Student Association is planning a fall concert. Expected costs (renting a hall, hiring a band, etc.) are $15,000. Assuming 2,000 people attend the concert, determine the break-even price per ticket. How much will the association lose if this price is charged and only 1,500 tickets are sold? (Do not use a negative sign with your answer.)
$Answer
(c.) City Hospital has a contract with the city to provide indigent health care on an outpatient basis for $125 per visit. The patient will pay $10 of this amount, with the city paying the balance ($115). Determine the amount the city will pay if the hospital has 5,000 patient visits.
$Answer
(d.) A civic organization is engaged in a fund-raising program. On Civic Sunday, it will sell newspapers at $2.50 each. The organization will pay $1.75 for each newspaper. Costs of the necessary permits, signs, and so forth are $750. Determine the amount the organization will raise if it sells 3,000 newspapers.
$Answer
(e.) Christmas for the Needy is a civic organization that provides Christmas presents to disadvantaged children. The annual costs of this activity are $10,000, plus $20 per present. Determine the number of presents the organization can provide with $30,000.
Answer in presents
Answer
solution a)
| amount the college must obtain from other sources[A-B] | $400,000 |
EXPLANATION:
Calculation of amount the college must obtain from other sources
| Total Fixed Cost | $20,000,000 |
| Variable Cost[$2400 x 2,000 students] | $48,00,000 |
| Total Cost[A] | $248,000,00 |
| Tution Fees[$12,000 x 2000 students] | $24,000,000 |
| Expected revenues from endowments | $4,00,000 |
| Total Revenue[B] | $244,000,00 |
| amount the college must obtain from other sources[A-B] | $400,000 |
solution b) association lose if this price is charged and only 1,500 tickets are $3750
EXPLANATION:
berak even price per ticket = TOtal Cost / expected ticket to be sold
= $15,000 / 2000
= $7.5
total ticket sold =1500
total amount received = 1500 x $7.5 =$11,250
loss = $15,000 – $11,250 =$3,750
hence total loss = $3750
solution c) Cost to city = [ ($125 -$10) x 5000] = $575,000
solution d) the amount the organization will raise if it sells 3,000 newspapers IS $1500
EXPLANATION :
| Revenue[$2.50 x 3,000] | 7500 |
| less variable cost [$1.75 x3000] | 5250 |
| contribution | 2,250 |
| less: Fixed Cost | 750 |
| profit | 1500 |
Solution e)
| Number of present[ $20,000/$20] | 1000 |
EXPLANATION :
| Available Funds | $30,000 |
| less: fixed cost | $10,000 |
| variable funds available | $20,000 |
| variable cost per present | $20 |
| Number of present[ $20,000/$20] | 1000 |
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