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Squeaky Horn Case

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Text Preview Abbington Youth Center
Background
1. Abbington Youth Center is a not-for-profit organization, which provides three high-quality programs: Infants and Toddlers Program, Preschool Program, and After-School Program. Targets are children up to three-years old, three to five-years old, and five to seven-years old. 2. Mark Thomas, assistant director of the Abbington Youth Center, instructs the program directors with his breakeven analysis. He calculated the following results by using average method: * Each student contributed $4,348 to fixed costs

* 115 students are the breakeven point
3. The current Abbington’s programs enrollment is exactly at breakeven, so Mr. Thomas encourages the program directors to expand the size of their programs to increase margin. However, they come up with three concerns about expanding programs: - Infants and Toddlers Program has reached its current maximum capacity of 50 students - Preschool Program could add another 10 students, but would need to hire another teacher, at a cost of $22,000. - After-School Program could add another 15 students, but this also needs another teacher, at a cost of $25,000. 4. Also, the center’s director hopes to have some extra money for painting and some renovations by charging more per-student fees. A 10000 dollars is needed during the year. Issues

1. Should Mr. Thomas use averages when the Center has three separate programs? 2. Should the teachers be considered a fixed or a variable cost? 3. What’s the new breakeven point if we consider an increase in supplies’ price, expected renovations expense, and extra teachers’ salaries? 4. Should the program charge more fees on each student?

5. Ms. Fineberg is considering eliminating the After School Program. Is it a right decision? Breakeven Analysis
Table 1: Breakeven point for each of the three programs using Exhibit 1 | Infants and Toddlers| Preschool| After-School|
Fee per student| $4,520|... Show More

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