Abstract
Students are placed in the position of Pedro Russell, a partner at GSM Partners, during the due diligence phase of the acquisition process for MedPro Institute, a vocational training school in the medical field. While reviewing the school’s financial data, Russell discovered that the school relied almost entirely on word of mouth for student recruitment, doing virtually no advertising. He saw the strong MedPro brand name as a significant growth opportunity and believed that increasing the school’s visibility in the New England medical community could attract more students. However, he was uncertain how an increase in student enrollment might affect the school’s cost structure.
Learning Objective
To help students develop critical thinking skills in analyzing cost behavior patterns, specifically focusing on how cost structures may shift with changes in activity levels.
Appropriate for the Following Course(s)
Managerial accounting; Entrepreneurship through acquisition
Cost Patterns at MedPro Institute
*TEACHING NOTES AND SUPPLEMENTAL MATERIALS ARE ONLY AVAILABLE TO EDUCATORS WHO HOLD TEACHING POSITIONS AT ACADEMIC INSTITUTIONS.