The details of a planned college course are as follows:

course fee per student $100
variable course cost per student $20
total fixed costs of the course $480

The budgeted number of students is 10. However, if a lower fee is charged, 20 students are likely to take the course.

How much should the course fee of $100 be reduced by to earn the same total profit from 10 students as from 20 students?

This question tests Cost Accounting in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

This question appeared in the Cambridge A-Level Accounting May/June 2024 examination, Paper 1 Variant 2 (9706_s24_qp_12.pdf).

Question

The details of a planned college course are as follows:

course fee per student	$100
variable course cost per student	$20
total fixed costs of the course	$480

The budgeted number of students is 10. However, if a lower fee is charged, 20 students are likely to take the course.

How much should the course fee of $100 be reduced by to earn the same total profit from 10 students as from 20 students?

Oracle Prep · Accepted Answer

The correct answer is C: $40.

✓ Correct Answer