Hurricane Island Case Solution & Answer


The School has been offering various courses under five different programs. However, the school is anon-profit organization that no intention for the profit. But, profit is not necessary for the school. Indeed it should know what is the actual cost of the program to at least cover the cost associated with the course. However, the estimated direct cost of a program at theschool is $45 per SPD[1] and has fixed overhead of $30 in any given particular program.

Similarly, the School’s Average cost per SPD is $75.Furthermore, if we analyze the revenues of the school, then we can determine that average revenue of the school from all program courses is $65. Which means that school is on the deficit of $10 per SPD. However, more specifically, all Maine Sea program is also in deficit with $6.88 per SPD. Furthermore, Summer Land and Winter Land are also in deficit by $ 11.45 and $11.85.

On the other hand, the Special programs are at $3.12 deficit per SPD. However, the Florida Sea program is almost on the breakeven. Indeed, the special programs are also generating aloss for the school.Furthermore, the only the program category that is generating net income is the manager’s programs in the school. Similarly, there is aloss of $10 per SPD consequence of rising costs, and decreasing number of enrolments.

Thus, the school even cannot meet with the breakeven point. On the other hand, the School is unable to utilize its full capacity either during theseason or in out of season. Because, as of the financial projections of 1986, the school is underutilizing its student’s capacity and the student program capacity as well. Meanwhile, it can be determined that school is in the deficit from 1981 to date. Since it also concluded that average cost of SPD has increased by 15%.

Furthermore, Maine Sea program is the widely known program among the students, since this program successfully attracts the students, youths from universities, and colleges. However, the number of enrolments in 1984 was 1208 students, but in 1985 it decreased to 1120 approximately by -7%. Furthermore, Maine Sea program is a much economical as compared to the other programs that school if offering the company.

Meanwhile, the There are five categories of the programs, However, amongst those categories, the least losing making categories are Maine Sea and special programs. See Exhibit 1, and figure 1 that shows how different categories are generating net income per SBD. On the other hand, remaining other categories are incurring losses instead of profit.Since the cost of caring programs exceeds the revenues generated by the programs. So, if the company focus on specific course of the program them it is also possible that it might lose the sales in coming years, and the situation can also become worst.

Conclusion and Recommendation

The Hurricane has been under the major operational deficits since the school has also been using marketing tools like presentation, direct mail, and by using the alumni of the school to promote the courses, and boost sales. Indeed, the School has granted 10% budget for the marketing purpose. Furthermore, the reason is that the cost of programs is increasing by 15% yearly. But, it is hard for the company toincrease the prices of the course that might result in the decline of sales made by the company……………………….

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