Question

Consider this decision scenario related to your studies on whether or not FIT should run a class. (All numbers made up.) Relevant information and assumptions are:

-For each student FIT receives $300 in tuition per class and another $300 in state aid, $600 altogether.

-We are considering whether to let a night class in Labor Economics run.

-We are assuming that we are using an adjunct (part-time) instructor that we pay $2,000 to teach the class.

-We are assuming that if the class doesn't run, we'll lose all the students, that they'll go to another college to take the class or will just do something else with their time. --Also, that this class doesn't have an effect on whether or not they take other classes at FIT.

-In order for a class to cover all of the fixed (things like the Dean's and President's salaries and the building and insurance that you will have to pay whether or not you run the class) and variable costs associated with it (variable costs are mainly the instructor who you will have to pay if you run the class and won't have to pay if you don't) it needs to generate $9,000 with an enrollment of 15 students.

-10 students sign up for the class

Do you run the class or cancel it? Why or why?

Answer 1