Micromedia offers computer training seminars on a variety of topics. In the semi
ID: 413713 • Letter: M
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 $120 per computer per day. Develop a model for the total cost to put on the seminar. Let .v represent the number of students who enroll in the seminar. Develop a model for the total profit if x students enroll in the seminar. Micromedia has forecasted an enrollment of 30 students for the seminar. How much profit will be earned if their forecast is accurate? Compute the breakeven point
Explanation / Answer
Given fixed cost = $9600
Unit Variable cost = $120 per computer per day
Revenue = 600 per student
Total cost = Fixed cost + Total variable cost
Total variable cost = Unit variable cost*No of students* no of days = 120*2*v
v = number of students who enroll in the seminar
Total cost = 9600 + 240v
Profit = (Revenue-Unit variable cost)*Quantity - Fixed cost
Quantity = number of students who enroll in the seminar = x
Profit = (600-120)*x - 9600
Profit = 480x - 9600
If number of students who enroll in the seminar x=30
Profit = (600-120)*30 - 9600 = 4800
Profit = 4800
Break even point = Fixed cost/(Revenue-variable cost) = 9600/(600-120) = 20
Break even point = 20 students