Question
Nugget Mike University is trying to decide whether to allow 100 more students into the university. Tuition is $6,600 per year. The controller has determined
Nugget Mike University is trying to decide whether to allow 100 more students into the university. Tuition is $6,600 per year. The controller has determined the following schedule of costs to educate students:
Number of Students Total costs
4,000 $ 30,000,000
4,100 30,300,000
4,200 30,600,000
4,300 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 = $7,286 per student. The president was wondering why the university should accept more students if the tuition is only $6,600.
Required:
- What are the variable costs per student and the total fixed costs of operating the university?
- What is the number of students at which the university breaks even?
- Should the university accept more students with tuition at $6,600?
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