Test 1 problems& solutions

# Test 1 problems& solutions - [Type text Bus522 Test 1...

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[Type text] Bus522 Test 1 - Answers Ch. 1 Problem 1. Organizers of an Internet training session will charge participants \$150 to attend. It costs \$3000 to reserve the room, hire the instructor, bring in the equipment, and advertise. Assume it costs \$25 per student for the organizers to provide the course materials. a. How many students have to attend for the company to break even? b. If the trainers think, realistically, that 20 people will attend, then what price should be charged per person for the organization to break even? ANSWER a. C(x) = 3000 + 25x R(x) = 150x Break-even number of students = 24 b. Cost = 3000 + 25(20) Revenue = 20p Break-even price = \$175 2. To establish a driver education school, organizers must decide how many cars, instructors, and students to have. Costs are estimated as follows. Annual fixed costs to operate the school are \$30,000. The annual cost per car is \$3000. The cost per instructor is \$11,000 and one instructor is needed for each car. Tuition for each student is \$350. Let x be the number of cars and y be the number of students. a. Write an expression for total cost. b. Write an expression for total revenue. c. Write an expression for total profit. d. The school offers the course eight times each year. Each time the course is offered, there are two sessions. If they decide to operate five cars, and if four students can be assigned to each car, will they break even? ANSWER a. C(x) = 30000 + 14000x b. R(y) = 350y c. P(x,y) = 350y - (30000 + 14000x) d. Each (1) car /instructor can serve up to (4 students/session)(2 sessions/course)(8 courses/year) = 64 students/year Five (5) cars can serve 5 X 64 = 320 students/year If all classes are filled, profit for five cars is 350(320) - (30000 + 14000(5)) = 12000 The school can reach the break-even point and make up to \$12,000 profit.

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