Rusty Co. sells two products: X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows:
-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

Question

Rusty Co. sells two products: X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows:  ​
-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

Quizplus · Accepted Answer

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.

Rusty Co Sells Two Products: X and Y