Question

You are considering moving the school to another neighborhood where the rent and utilities will increase to $10,392.00, salaries to $6,594.00 and insurance to $2,062.00 per month. Variable cost per student will increase up to $160.00 per month. However you can charge $1,045.00 per student. At what point will you be indifferent between your current mode of operation and the new option

Answer 1

Answer:

20

Explanation:

Missing word "You run a school in Florida. Fixed monthly cost is $5,290.00 for rent and utilities, $6,345.00 is spent in salaries and $1,249.00 in insurance. Also every student adds up to $95.00 per month in stationary, food etc. You charge $666.00 per month from every student now."

Let the number of student be x

Total profit from first operation = 666x - 5290 - 6345 - 1249 - 95x

Total profit from first operation = 571x - 12884

Total profit from second operation = 1045x - 10392 - 6594 - 2062 - 160x

Total profit from second operation = 885x - 19048

At point of indifference, Profit from first operation=Profit from second operation

571x - 12884 = 885x - 19048

885x - 571x = 19048 - 12884

314x = 6164

x = 6164/314

x = 19.6306

x = 20

Hence, one will be indifferent when the total number of student is 20