Life Lessons provides academic enrichment and review activities for high school students in 4 subject areas: English, mathematics, science, and history. In November 20x1, the firm's information system produced the following data: $\begin{array}{lllll}&\text { Number of}&\text { Number of }&\text {Percent of}&\text { Direct }\
&\text { Tutors } &\text { Students } &\text { Faculty } & \text { Costs }\
\text { English } & 4 & 20 & 10 \% & \$ 6,000 \
\text { Mathematics } & 3 & 24 & 25 & 8,000 \
\text { Science } & 5 & 15 & 50 & 12,000\\text { History }& 2&8&15&3,000
\end{array}$ Regardless of subject area, clients pay $50 per hour for tutoring services. Costs associated with the Life Lessons operations for November 20x1 included: $\begin{array}{lr}
\text { Facility rent } & \$ 2,500 \
\text { Custodial services } & 1,800 \
\text { Utilities } & 600 \
\text { Computer equipment amortization } & 800 \
\text { Advertising } & 400
\end{array}$
Assume Life Lessons allocates facility rent, custodial services, and utilities on the basis of square metres occupied and computer equipment amortization on the basis of number of students. Advertising is not allocated. If students received 200 hours of mathematics tutoring in November 20x1, what will the total profit from mathematics tutoring be for the same period?
A) $10,000
B) $8,775
C) $8,488
D) $488

Question

Quizplus · Accepted Answer

To calculate the total profit from mathematics tutoring, first calculate the revenue: 200 hours * $50/hour = $10,000. Then, calculate the direct costs for mathematics: $8,000. Next, allocate the indirect costs. Facility rent, custodial services, and utilities are allocated based on square meters, but the problem doesn't provide this information, so we assume it's proportional to the number of tutors. Mathematics has 3 out of 14 total tutors, so it gets 3/14 of these costs. Computer equipment amortization is allocated based on the number of students, so mathematics gets 24/67 of this cost. Advertising is not allocated. Calculate the allocated costs and subtract from revenue to find profit.

Life Lessons Provides Academic Enrichment and Review Activities for High