Question

1. Pet Energy Therapy Association (PETA) treats peoples’ pets, and has the following cost structure:

Charge per therapy session $ 95

Variable cost per therapy session $ 45

Fixed costs $75,000

They expect to perform 2,000 two-hour session each year (Two people, 8hrs/day, 5 days/week, 50 weeks/year).

D. If only one employee worked, booked fulltime, thus they only perform 1,000 sessions per year, what would be the profit/loss (fixed costs remain the same)?

Answer 1

Given Information:

Charge per session = $95, Varible cost = $45, Fixed cost = 75000

For this calculation you need to Know tha format of cost sheet which is as:

Particulars	Amount
Revenue from Session	xxx
Less Variable cost	xxx
Contribution	xxx
Less Fixed cost	xxx
Profit / Loss	xxx

Calculate the Profit or Loss so given one employee worked and per form 1000 sessions per year.

Particulars	Amount
Revenue from Session = 1000 x 95	95000
Less Varisble cost = 1000 x 45	-45000
Contribution	50000
Less Fixed cost	-75000
Loss	-25000

So there is Loss of 25000 if company only manage to perform 1000 Session in a year.