Breakeven Analysis 1. The Federation of Student Societies (FESS) wants to offer

Question

Breakeven Analysis

1. The Federation of Student Societies (FESS) wants to offer a one-day training course to help students in job hunting and to raise funds. The organizing committee is sure that they can find alumni, local business people, and faculty to provide the training at no charge. Thus the main costs will be for space, meals, handouts, and advertising.

The organizers have classified the costs for room rental, room setup, and advertising as fixed costs. They also have included the meals for the speakers as a fixed cost. Their total of $225 is pegged to a room that will hold 40 people. So if demand is higher, the fixed costs will also increase.

The variable costs for food and bound handouts will be $20 per student. The organizing committee believes that $35 is about the right price to match value to students and their budgets. Since FESS has not offered training courses before, they are unsure how many students will reserve seats.

Determine the number of registrations that would be needed for revenue to equal cost.

Explanation / Answer

Fixed costs = $225 Variable costs = $20 per student. Price = $35 Contribution margin per student $35 - $20 = $15 Break even point = $225/$15 = 15 answer: 15 students

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