#14

You run a school in Florida. Fixed monthly cost is $5,301.00 for rent and utilities, $6,246.00 is spent in salaries and $1,551.00 in insurance. Also every student adds up to $91.00 per month in stationary, food etc. You charge $653.00 per month from every student now.

You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,043.00, salaries to $6,923.00 and insurance to $2,146.00 per month. Variable cost per student will increase up to $171.00 per month. However you can charge $1,021.00 per student. At what point will you be indifferent between your current mode of operation and the new option?

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