HCT-Dubai is thinking of starting a new one-year Master’s program in Civil Engin
ID: 1126942 • Letter: H
Question
HCT-Dubai is thinking of starting a new one-year Master’s program in Civil Engineering. They plan to use their existing facilities, but hire 5 new teachers, whose salary would be around 245,000 Dh per year for each. They expect their operating and maintenance expenses will increase by 15,000 Dh for every new student. Finally, they would set the tuition fees at 50,000 Dh per student.
What is the minimum number of students required to break even?
What is the revenue at break-even point?
What is the profit at break-even point?
If the capacity for the new program is 50 students per year.
D.What percentage of capacity is breakeven number of students?
E.How much profit or loss would they make at 50% capacity?
Minimum number of students to break even
Revenue at break even point
Profit at break even point
Percentage of capacity at break even
Profit (or loss) at 50% capacity
350,000 Dh
-350,000 Dh
100%
35 students
0 Dh
1,750,000 Dh
50%
70%
50 students
7 students
1,470,000 Dh
2,500,000 Dh
-A.B.C.D.E.F.G.H.I.J.K.L.Minimum number of students to break even
-A.B.C.D.E.F.G.H.I.J.K.L.Revenue at break even point
-A.B.C.D.E.F.G.H.I.J.K.L.Profit at break even point
-A.B.C.D.E.F.G.H.I.J.K.L.Percentage of capacity at break even
-A.B.C.D.E.F.G.H.I.J.K.L.Profit (or loss) at 50% capacity
A.350,000 Dh
B.-350,000 Dh
C.100%
D.35 students
E.0 Dh
F.1,750,000 Dh
G.50%
H.70%
I.50 students
J.7 students
K.1,470,000 Dh
L.2,500,000 Dh
Explanation / Answer
D
Minimum number of students to break even
35 no of students required to breakeven
F
Revenue at break even point
35*50000= 1,750,000
E
Profit at break even point
TR-TC=(35*50000)-(2,45,000*5+35*15000)=0
G
Percentage of capacity at break even
=FC/Contribution = 1225000/2500000 = 50%
A
Profit (or loss) at 50% capacity
TR-TC=(25*50000)-(245000*5+25*15000)= -1350000
Minimum number of students to break even
For each
Salary, FC
2,45,000
VC
15000
Fee
50000
For each teacher, no of students
7
For 5 teacher, total no of students
35
For each teacher =2,45,000/(50000-15000) = 7
For 5 teachers = 7*5 = 35 total no of students
D
Minimum number of students to break even
35 no of students required to breakeven
F
Revenue at break even point
35*50000= 1,750,000
E
Profit at break even point
TR-TC=(35*50000)-(2,45,000*5+35*15000)=0
G
Percentage of capacity at break even
=FC/Contribution = 1225000/2500000 = 50%
A
Profit (or loss) at 50% capacity
TR-TC=(25*50000)-(245000*5+25*15000)= -1350000
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