Bus630 Week5

Case 9A Case: Middlehurst House

Xavier Moore

BUS 630 Managerial Accounting

Prof. Wendy Achilles

May 20, 2013

Case 9A Case: Middlehurst House

Alternative A

Percentage

New Increase

Instructor Average over

to Student Total Number of Incremental Tuition Current

Age Ratio Children New Classes Costs Increase Tuition

2-3 5:1 20 2 $3,9201 $196.00 60%

3 4 8:1 15 1 1,9602 130.67 47

4 5 8:1 15 1 1,9602 130.67 47

5 6 10:1 30 1 1,9602 65.33 25

1 Salaries (2 instructors x $1,600) $3,200

Staff benefits [($3,200 x .10) + (2 x $200)] 720

Incremental costs $3,920

2 Salaries (1 instructor x $1,600) $1,600

Staff benefits [($1,600 x .10) + (1 x $200)] 360

Incremental costs $1,960

Alternative B

Incremental revenue ($260 x 10 students) $2,600

Minus incremental costs:

Instructor's salary $1,600

Staff benefits [(.10 x $1,600) + $200] 360

Food ($1.25 x 10 students x 22 days) 275

Variable supplies ($1 x 10 students) 10 2,245

Incremental profit $355

Having a new class added would be beneficial due to the profits...