# Solved Question: Bri Smith and Joe Sullivan, two kinesiology students at ASU

## Description

Question:

Bri Smith and Joe Sullivan, two kinesiology students at ASU, are considering the possibility of offering swimming lessons to children at the university pool. The pool would charge a fixed rental fee of \$1500 for the 8-weeks of lessons as well as an admission and lifeguarding fee of \$7 per pupil. Bri and Joe estimate an additional cost of \$4 per pupil to hire additional helpers. Bri and Joe plan to charge \$65 per student for the 8-week class.

a. Use the data given to create a model for the total profit. Use the Excel tool Data/What-If Analysis/Goal Seek to determine the following:

b. the break-even quantity for the number of pupils needed to enroll in the swimming class.

c. the number of pupils they need to enroll if they want to make a profit of \$5,000.

d. how much per pupil they would have to charge if only 60 pupils enrolled and they still wanted to realize their profit goal of \$5,000.

a)

 Unit Price \$65 Units sold Total revenue \$0 Fixed costs \$1,500 variable costs \$11 Total cost \$1,500 Profit -\$1,500

b) The break even quantity for the number of pupils to be enrolled by using goal seek in excel:

 Unit Price \$65 Units sold 28 Total revenue \$1,806 Fixed costs \$1,500 variable costs \$11 Total cost \$1,806 Profit \$0

c) Number of pupils to be enrolled to make a target profit of \$5000

 Unit Price \$65 Units sold 120 Total revenue \$7,824 Fixed costs \$1,500 variable costs \$11 Total cost \$2,824 Profit \$5,000

d) Charge per pupil if only 60 pupils were enrolled and a target profit of \$5000 is required

 Unit Price \$119 Units sold 60 Total revenue \$7,160 Fixed costs \$1,500 variable costs \$11 Total cost \$2,160 Profit \$5,000

Hence, unit price of \$119 would have to be charged.

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