### Webster training services

Webster training services (WTS) provides instruction on the use top of computersoftware for the employees of its corporate clients. It offers courses in the clients’ officeson the clients’ equipment. The only major expense WTS incurs is instructor salaries; itpays instructors $5,000 per course taught. WTS recently agreed to offer a course of

instruction to the employees of Chamber Incorporated at a price of $400 per student.Chambers estimated that 20 students would attend the course.

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Part 1

required

A. relative to the number of students in a single course, is the cost of instruction afixed or variable cost?

B. Determine the profit, assuming that 20 students attend the course

C. Determine the profit, assuming a 10% increase in enrollment (i.e., enrollmentincreases to 22 students) what is the percentage change in profit ability?

D. Determine the profit, assuming a 10% decrease in enrollment (i.e., enrollmentdecreases to 18 students) what is the percentage change in profit ability?

E. Explain why a 10% shift in enrollment produces more than a 10% shift inprofitability. Use the term that identifies this phenomenon

Part 2

The instructor has offered to teach the course for a percentage of tuition fees specifically,she wants 250 per person attending the class. Assume that the tuition fee remains at $400per student.

Required

F. is the cost of instruction a fixed or variable cost

G. determine the profit, assuming that 20 students take the course

H. Determine the profit, assuming a 10% increase in enrollment (i.e., enrollmentincreases to 22 students) what is the percentage change in profit ability?

I. Determine the profit, assuming a 10% decrease in enrollment (i.e., enrollmentdecreases to 18 students) what is the percentage change in profit ability?

J. Explain why a 10% shift in enrollment produces a proportional 10% shift inprofitability.

Part 3

WTS sells a workbook with printed material unique to each course to each student whoattends the course. Any workbooks that are not sold must be destroyed. Prior to the firstclass WTS printed 20 copies of the books based on the client’s estimate of the number ofpeople who would attend the course. Each workbook costs $25 and is sold to courseparticipants for $40. This cost includes a royalty fee paid to the author and the cost ofduplication.

Required

K. calculate the workbook cost in total and per student, assuming that 18, 20, or 22students attempt to attend the course.

L. Classify the cost of workbooks as fixed or variable relative to the number ofstudents attending the course

M. Discuss the risk of holding inventory as it applies to the workbooks

N. Explain how a just-in-time inventory system can reduce the cost and risk ofholding inventory.

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