For the company to break even per month, how many students would have to purchase the course

Question

The manager of an e-learning company identified a new course that they could create and sell for $80 per student. The costs for adding this new course to their product offering would be: $2,200 per month to lease additional space, $340 per month for insurance, $5,200 per month for support staff, $4000 per month for sales staff and variable costs of $3 per student. they can sell to a maximum of 500 students per month

Answer 1

REVENUE = $80(S)    where S = # OF STUDENTS

 

Fixed costs

 2,200 

    340

 5,200 

 4,000

------

$11,740

 

Variable costs = 3(S) 

 

to break even, REVENUE - COSTS = 0

 

So  80S - (11,740 + 3S) = 0

 

or  77S  = 11,740

 

To break even , S (number of students) would be 152.4675 or to round up 153 students

 

153*$77(net) = $11,781 or just $41 over their costs of $11,740