Question

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Fanning Training Services (FTS) provides instruction on the use of computer software for the employees of its corporate clients. It offers courses in the clients’ offices on the clients’ equipment. The only major expense FTS incurs is instructor salaries; it pays instructors $5,300 per course taught. FTS recently agreed to offer a course of instruction to the employees of Novak Incorporated at a price of $450 per student. Novak estimated that 20 students would attend the course.

Base your answers on the preceding information.

FTS sells a workbook with printed material unique to each course to each student who attends the course. Any workbooks that are not sold must be destroyed. Prior to the first class, FTS printed 20 copies of the books based on the client’s estimate of the number of people who would attend the course. Each workbook costs $26 and is sold to course participants for $43. This cost includes a royalty fee paid to the author and the cost of duplication.

Calculate the workbook cost in total and per student, assuming that 16, 20, or 22 students attempt to attend the course.

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

Answer 1

	No. of Students attending
	16	20	22
Total cost of Printing the workbook ($)	520	520	572
Per Student cost of workbook ($)	32.5	26	26
Nature of Cost of Workbook	Fixed	Fixed	Variable

Since already 20 workbooks have been printed, cost till 20 students will be fixed. Maening that irrespective of students attending or not cost of 520 is incurred.

For additional students attending the cousre, extra cost of $26 will be incurred. And thus the same is variable.