Business analysis

Question

You run a school in Florida. Fixed monthly cost is $5,290.00 for rent and utilities, $6,105.00 is spent in salaries and $1,190.00 in insurance. Also every student adds up to $98.00 per month in stationary, food etc. You charge $732.00 per month from every student now. 

You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,569.00, salaries to $6,061.00 and insurance to $2,244.00 per month. Variable cost per student will increase up to $152.00 per month. However you can charge $1,123.00 per student.

How much do you currently charge per student?

Answer 1

This has NOTHING to do with probability and everything to do with guessing and algebra.

First the guesses. They are horrid starting assumptions but we have to start somewhere.

Assumed, current business model is for a NONPROFIT and we assume that Costs (variable and fixed) will be exactly ZERO

Assumed: After moving the total students matriculated will be the same as pre move.

S = students. fixed expenses = students * (-variable expenses + tuition)

First equation: $12585 = S*($732 - $98)

Second equation: Tuition per student = (Newfixedcosts + S* $152)/S

note: Newfixed costs = 11,569.00+ $6,061.00 + $2,244.00 per month.

ALSO, in the given problem, the solution S for number of students is a non integer. Change it to the next highest integer.

This is all simple algebra. First find the number of students, then using that, find required tuition for a zero sum solution (i.e. no net profit, no net loss)

Don't expect me to do your homework for you but if you could use some instruction on remedial algebra or other things like statistics or probability, contact me at www.wyzant.com/tutors/David4745

Answer 2

Currently, your school charges each student $732.00 per month. This amount covers the fixed costs like rent, utilities, salaries, and insurance, as well as the variable costs like stationary and food, which amount to $98.00 per student. So, the total cost per student is $732.00.

Fixed Costs:

Rent + Utilities: $5,290.00

Salaries: $6,105.00

Insurance: $1,190.00

Variable Costs:

Stationary, Food, etc.: $98.00

Total Cost per Student = Fixed Costs + Variable Costs = $5,290.00 + $6,105.00 + $1,190.00 + $98.00 = $12,683.00

Since you charge each student $732.00, this covers the total cost and also generates revenue for the school.