A couple of entrepreneurial business students at the University
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A couple of entrepreneurial business students at the University

A couple of entrepreneurial business students at the University of The Gambia decided to put their education into practice by developing a tutoring company for business students. While private tutoring was offered, it was determined that group tutoring before tests in the large statistics classes would be beneficial. The students rented a room close to campus for D3000 for 3 hours. They developed handouts based on past tests, and these handouts (including color graphs) cost D50 each. The tutor was paid D250 per hour, for a total of D750 for each tutoring session.

a) If students are charged D200 to attend the session, how many students must enroll for the company to break even?

b) A somewhat smaller room is available for D2000 for 3 hours. The company is considering this possibility. How would this affect the break-even point?

Hint
Statistics The break-even point simply refers to the level in production where the total costs of production equal the total revenues for a product or a service. At break-even point the company does not make any loss nor does it gain any profits. To calculate the break-even point based on sales dollars, Divide the total fixed costs by the contribution margin. To calculate a break-even point b...

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