To Establish a Driver Education School, Organizers Must Decide How

question 28

Essay

To establish a driver education school, organizers must decide how many cars, instructors, and students to have. Costs are estimated as follows. Annual fixed costs to operate the school are $30,000. The annual cost per car is $3000. The cost per instructor is $11,000 and one instructor is needed for each car. Tuition for each student is $350. Let x be the number of cars and y be the number of students.
a.Write an expression for total cost.
b.Write an expression for total revenue.
c.Write an expression for total profit.
d.The school offers the course eight times each year.Each time the course is offered, there are two sessions.If they decide to operate five cars, and if four students can be assigned to each car, will they break even?

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Definitions:

Net Income Earned

The total earnings of a company after all expenses and taxes have been deducted from total revenues, essentially the same as Net Income but emphasizing the acquisition aspect.

Common Stock

A type of equity security that represents ownership in a corporation, with voting rights and the potential to receive dividends.

Gain or Loss

The financial result that occurs when the selling price of an asset differs from its carrying amount on the books.

Equity Method

An accounting technique used to record investments in associate companies, recognizing the investor's share of the investee's profits or losses.