Breakeven questions
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1. The Evergreen Fertilizer Company produces fertilizer. The company's fixed monthly cost is $25,000, and its variable cost per pound of fertilizer is $0.15. Evergreen sells the fertilizer for $0.40 per pound.
a-Determine the monthly break-even volume for the company.
b-If the maximum operating capacity of the Evergreen Fertilizer Company is 120,000 pounds of fertilizer per month, determine the break-even volume as a percentage of capacity.
2- The College of business at tech is planning an online MBA program. The initial start-up cost for computing equipment, facilities, course development, and staff recruitment and development is $350,000. The college plans to charge tuition of $18,000 per student per year. However, the university administration will charge the college $12,000 per student for the first 100 students enrolled each year for administrative costs and its share of the tuition payments.
a- How many students does the college need to enroll in the first year to beak even?
b- If the college can enroll 75 students the first year, how much profit will it make?
c-The College believes it can increase tuition to $24,000, but doing so will reduce enrollment to 35. Should the college consider doing this?
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The solution explains calculations relating to breakeven analysis
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