You gun a school in Florida. Fixed monthly cost is $5,689.00 for rent and utilities, $5,807.00 is spent in salaries and $1,772.00 in insurance. Also every student adds up to $93.00 per month in stationary, food etc. You charge $710.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,056.00, salaries to $6,925.00 and insurance to $2,056.00 per month. Variable cost per student will increase up to $177.00 per month. However you can charge $1,053.00 per student. At what point will you be indifferent between your current mode of operation and the new option?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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You run a school in Florida. Fixed monthly cost is $5,689.00 for rent and utilities, $5,807.00 is spent in salaries and
$1,772.00 in insurance. Also every student adds up to $93.00 per month in stationary, food etc. You charge $710.00 per
month from every student now.
You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,056.00,
salaries to $6,925.00 and insurance to $2,056.00 per month. Variable cost per student will increase up to $177.00 per
month. However you can charge $1,053.00 per student. At what point will you be indifferent between your current mode
of operation and the new option?
Submit
Transcribed Image Text:You run a school in Florida. Fixed monthly cost is $5,689.00 for rent and utilities, $5,807.00 is spent in salaries and $1,772.00 in insurance. Also every student adds up to $93.00 per month in stationary, food etc. You charge $710.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,056.00, salaries to $6,925.00 and insurance to $2,056.00 per month. Variable cost per student will increase up to $177.00 per month. However you can charge $1,053.00 per student. At what point will you be indifferent between your current mode of operation and the new option? Submit
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