A couple of entrepreneurial business students at State University decided to put their education into practice by developing a tutoring company for busi- ness students. While private tutoring was offe 1

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State University decided to put their education into

practice by developing a tutoring company for busi-

ness students. While private tutoring was offered, it

was determined that group tutoring before tests in

the large statistics classes would be most beneficial.

The students rented a room close to campus for $300

for 3 hours. They developed handouts based on past

tests, and these handouts (including color graphs)

cost $5 each. The tutor was paid $25 per hour, for a

total of $75 for each tutoring session.

(a) If students are charged $20 to attend the session,

how many students must enroll for the company

to break even?

(b) A somewhat smaller room is available for $200

for 3 hours. The company is considering this

possibility. How would this affect the break-even

point?

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