Question

Micromedia offers computer training seminars on a variety of topics. In the seminars each student works at a personal computer, practicing the particular activity that the instructor is presenting. Micromedia is currently planning a two-day seminar on the use of Microsoft Excel in statistical analysis. The projected fee for the seminar is $600 per student. The cost for the conference room, instructor compensation, lab assistants, and promotion is $9600. Micromedia rents computers for its seminars at a cost of $60 per computer per day.

a) Develop a model for the total cost to put on the seminar. Let ? represent the number of students who enroll in the seminar.

b) Develop a model for the total profit if ? students enroll in the seminar.

c) Micromedia has forecasted an enrollment of 30 students for the seminar. How much profit will be earned if its forecast is accurate?

d) Compute the breakeven point.

Answer 1

Given: Fixed cost = FC = $9600

Variable cost per student = VC = $60 * 2 days = $120

No. of student = x

Project fee = Revenue per student = R = $600

a) Total cost = Fixed Cost + Variable cost per student * No. of students

Total Cost = 9600 + 120*x

b) Total Profit = Total Revenue - Total Cost

Total Profit = Revenue per student * No. of students - Total Cost

Total Profit = 600*x - (9600 + 120*x)

c) For 30 students,

Total profit = 600 * 30 - (9600 + 120*30) = 18000 - 13200 = $4,800

d) At breakeven point, profit = 0

Total Profit = 600*x - (9600 + 120*x)

0 = 600*x - (9600 + 120*x)

480x = 9600

x = 20

Brealeven point = 20 students

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