Assuming the fixed costs are borne by the Turner Test Prep Company on an annual basis regardless of the fact that CPA exam preparatory sessions are held only two times a year, the detailed costs expenses can be categorized into fixed and variable costs as follows:
For the break even analysis, the business operation should generate just enough revenue to cover the operating expenses (without any loss or profits). The case states $1,100 per student as the fee schedule. In this case, breakeven point can be expressed as: Fixed Costs + Variable Costs = Revenue. Thus, 139200 + 600X = 1100X
Solving for X, X = 139200/500 -> 278.4 students annually or 140 students/session for biannual session schedule.
So, Jessica Turner’s breakeven point considering $1,100 in fees per student is at least 140 students/session or 280 students annually to cover for the business expenses without making any profit or incurring a loss. 2.
Turner test prep’s competitive advantage lies in offering the following services: •
Live classroom sessions along with audiotapes of the lectures for later review •
One-on-one feedback sessions with Jessica Turner on a bi-weekly basis to track progress The result of these services provided a 100%, 70% and 80% pass rate for the last three sessions. NTC program boasted a 75% pass rate.
Turner test prep company should continue with the services mentioned above. The focus going forward should be to improve marketing and promote the higher passing rate. NTC has been around for a longer time and unless Turner Test Prep Company advertises its strong unique points, it would be difficult to sway customers away from NTC.
To achieve greater market share, Jessica Turner needs to improve the quality of the services considering customer’s profile and possibly expanding the geographical market to include additional areas in addition to the bay area. •
MARKETING EFFORTS & EXPANSION: Higher passing rate should be a stronger ‘sell’ point. A survey system...
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