Question
Fixed, Variable, and Average Costs Midstate University is trying to decide whether to allow 100 more students into the university. Tuition is $5,000 per
Fixed, Variable, and Average Costs Midstate University is trying to decide whether to allow 100 more students into the university. Tuition is $5,000 per year. The controller has determined the following schedule of costs to educate students: Number of Students 4,000 4,100 Total costs $30,000,000 4,200 4,300 30,300,000 30,600,000 30,900,000 The current enrollment is 4,200 students. The president of the university has calculated the cost per student in the following manner. $30,600,000/4,200 students = $7286 per student. The president was wondering why the university should accept more students if the tuition is only $5,000. Required: a. What is wrong with the president's calculation? b. What are the fixed and variable costs of operating the university?
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