Answer:
Variable cost per year = VC per day * no. of days in a year
Variable cost per year = $10 * 365 = $3650 per child per year
Revenue per year = Revenue per day * no. of days in a year
Revenue per year = $25 *365 = $9125 per child per year
Computation of BEP :
BEP occurs when revenue becomes equal to total cost.
BEP = FC/CM per unit
CM per unit = Revenue per unit - VC per unit
According to the question,
CM per child = $9125 - $3650 = $5475 per child
BEP = 300000/ 5475 = 54.79 children or 55 children (rounded up to the nearest whole integer decimal)
BEP E×ρréššed in dollars = BEP in units * Revenue per unit
BEP E×ρréššed in dollars =55* $9125 = $501875
Computation of required revenue to be earned to earn target...