Question

Please answer question with Excel snapshot

-A couple of entrepreneurial business students at State University decided to put their education into practice by developing a tutoring company for busi-ness students. While private tutoring was offered, it was determined that group tutoring before tests in the large statistics classes would be most beneficial. The students rented a room close to campus for $300 for 3 hours. They developed handouts based on past tests, and these handouts (including color graphs)cost $5 each. The tutor was paid $25 per hour, for a total of $75 for each tutoring session.

(a) If students are charged $20 to attend the session, how many students must enroll for the company to break even?

(b) A somewhat smaller room is available for $200 for 3 hours. The company is considering this possibility. How would this affect the break-even point?

Answer 1

AT breakeven point

Contribution = fixed costs

If n students are enroled at break even point,

20n = 5n+(300+75)

15n = 375

n = 25

(b) If the room is available at 200, the fixed cost will be reduced by 100.

Now

20n = 5n+275

n = 275/15 = 18.33 =19