Break-even Analysis: Partnership Program
XAT 2016 · Quantitative Ability & Data Interpretation · Medium · Quantitative Ability
Company ABC starts an educational program in collaboration with Institute XYZ. As per the agreement, ABC and XYZ will share profit in 60 : 40 ratio. The initial investment of Rs. 100,000 on infrastructure is borne entirely by ABC whereas the running cost of Rs. 400 per student is borne by XYZ. If each student pays Rs. 2000 for the program find the minimum number of students required to make the program profitable, assuming ABC wants to recover its investment in the very first year and the program has no seat limits.
- A.
63
- B.
84
- C.
105
- D.
157
- E.
167
C
Explanation
Revenue per student = Rs. 2000. Running cost per student (borne by XYZ) = Rs. 400. Total profit per student = . ABC's share of profit per student = . ABC's total investment = Rs. 100,000. Minimum students required for ABC to recover investment = .
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