Star of the Sea School has annual fixed costs of $150,000 and variable costs of $550 per student. Star of the Sea expects 345 students for the upcoming year. If the school wishes to earn a profit of $10,000, what should tuition per student be?

Question

Quizplus · Accepted Answer

To earn a profit of $10,000, the school needs to cover its fixed costs of $150,000, variable costs of $550 per student, and make a profit of $10,000. So, the total revenue needed is $150,000 + (550 * 345) + 10,000 = $352,750. Dividing this by the number of students (345) gives a tuition per student of $1,014.

Star of the Sea School Has Annual Fixed Costs of $150,000