Asked by Robert Clark on May 03, 2024
Verified
Xander Studios holds a sculpting class for which it charges students $250. The costs consist of the following: Variable costs per student:
Sculpting supplies
$ 100
Enrollment costs
50
Fixed costs for the course:
Instructor's salary
$1,000
Rental cost of the classroom
500
The break-even number of students is
A) 2
B) 11
C) 12
D) 20
Sculpting Supplies
Various tools, materials, and accessories used by artists to shape and create sculptures.
Enrollment Costs
Expenses associated with signing up for or enrolling in a service, course, or institution.
Break-Even
The juncture where the sum of all revenues is equivalent to the sum of all costs, leading to neither a profit nor a loss.
- Ascertain and explain the break-even threshold in terms of units and in financial terms as dollars.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
C
Explanation :
The break-even point is calculated by dividing the total fixed costs by the price per unit minus the variable costs per unit. Here, the fixed costs are $1,000 (instructor's salary) + $500 (rental cost) = $1,500. The variable costs per student are $100 (sculpting supplies) + $50 (enrollment costs) = $150. The price charged per student is $250. Therefore, the break-even point is $1,500 / ($250 - $150) = $1,500 / $100 = 15 students.
Learning Objectives
- Ascertain and explain the break-even threshold in terms of units and in financial terms as dollars.