Question

The West Adelaide Squash Centre has received an offer from former World No. 1 Player; Nicol Ann David who wishes to spend six months in the beautiful Adelaide weather and have 100 private squash coaching sessions at the centre. If the offer is accepted, the West Adelaide Squash Centre will need to hire an additional squash court at a cost of $28,000 for that six month period. The following data has been provided:

Private squash coaching fee (per session)	$1,200
Cost of squash racket and grips per session	$250
Cost of squash balls per session	$80
Cost of squash goggles per session	$170

REQUIRED:

Calculate the number of private squash coaching sessions required for the West Adelaide Squash Centre to break-even (show workings).

Answer 1

Calculating Contribution per session of Private Sqash Coaching

Private squash coaching fee (per session)	$1,200
Less: Variable Costs:
- Cost of squash racket and grips per session	$250
- Cost of squash balls per session	$80
- Cost of squash goggles per session	$170
Contribution per session of Private Sqash Coaching	$700

Fixed Cost = Cost of hiring an additional squash court for a period of six months = $28,000

Break Even Point = Fixed Cost/Contribution per session of Private Sqash Coaching

= 28000/700 = 40 private squash coaching sessions

Hence, the number of private squash coaching sessions required for the West Adelaide Squash Centre to break-even is 40.