Question 1: The manager of an e-learning company identified a new course that it could create and sell for $90 per student. The costs for adding this new course to its product offering would be $1800 per month to lease additional space, $300 per month for insurance, $5000 per month for support staff, $4000 per month for sales staff, and variable costs of $2 per student. The maximum number of students is 500 per month.
Required:
a. For the company to break even, how many students would have to purchase the course each month?
b. If the company made a profit of $32,460 last month, how many students purchased the course?
Question 2: Olga was planning to set up a business where she would purchase paintings for $1000 per unit and sell them for $1600 per unit. She wanted to conduct a break-even analysis and identified the following costs for running her business: $4450 per month for store leasing, $50 per month for website hosting fee, $5000 per month for staff salary, $2000 per month for advertising costs, and $25 per unit for labour charges to pack the paintings.
Required:
a. How many paintings would she have to sell per month to break even?
b. If she wants to make a profit of $23,000 in a month, how many paintings would she have to sell?