Calculating the Cost of the Campaign

2021-05-11 17:04:11
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150 words
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X = 150

Therefore, one must consume 150 lunches at club luncheon to have same cost of lunch regardless of the place it is consumed

Saving if one had 200 lunches at the club luncheon instead of elsewhere

Cost elsewhere of lunches elsewhere cost at the club

Cost elsewhere (200* 10) = $ 2000

(150 + 200*9) = $ 1950

2000 1950 = $ 50One would save $ 50

5-38 Advertising Expenditure

Additional Break-Even Units

Break-even units = Fixed costs /contribution margin

Contribution margin = annual fee variable cost per student

Contribution = 14800 8800 = 6000

Additional students required to break even with advertisement campaign costing $1.41 million

1410000 / (14800 -88000)

1410000 / 6000 = 235 students

To break-even the college requires the campaign should attract 235 additional students to breakeven.

2. Advertisement Campaign Cost to Break-Even Suppose they Attract Additional 335 Students

Campaign amount / contribution = additional number of students

Campaign amount = additional number of students * contribution

Therefore,

Campaign amount = 6000*335 = $ 2, 010, 000

3. 3-Month Campaign Additional Cost for the One Month

Additional campaign cost for the one month = contribution * additional students

Or

Additional campaign cost for the one month = campaign cost for the 3 months campaign cost for 2 months

Additional campaign cost for the one month = 6000 * (440 335)

6000* 105 = $ 630,000

 

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