A university is planning a seminar. It costs $3000 to reserve a room, hire an instructor, and bring in the equipment. Assume it costs $25 per student for the administrators to provide the course materials. If we know that 20 people will attend, what price should be charged per person to break even?
Question
A university is planning a seminar. It costs 25 per student for the administrators to provide the course materials. If we know that 20 people will attend, what price should be charged per person to break even?
Solution
To calculate the price per person to break even, we need to first calculate the total cost of the seminar.
Step 1: Calculate the fixed costs The fixed costs include the cost to reserve a room, hire an instructor, and bring in the equipment, which is $3000.
Step 2: Calculate the variable costs The variable costs include the cost per student for the course materials. If 20 people are attending and it costs 25 = $500.
Step 3: Calculate the total cost The total cost of the seminar is the sum of the fixed costs and the variable costs. So, the total cost is 500 (variable costs) = $3500.
Step 4: Calculate the price per person to break even To break even, the price charged per person should cover the total cost. Therefore, the price per person should be the total cost divided by the number of people attending. So, the price per person is 175.
Therefore, the university should charge $175 per person to break even.
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