Big Bucks University is planning to offer a series of professional accounting course classes. The fee payable for this professional accounting course is £400 per student per module. The university has already allocated lecturers currently employed at the university to each class and has determined that lecturers are being paid £60 per hour for the 60 hours required to deliver each module. The lecturers will be paid whether any students are enrolled on each module or not and they can be diverted to other classes if the professional accounting course modules do not run. Books and handouts are provided to each student at a cost of £100 per student per module. The university allocates £1,200 of central overhead costs for the year to the room used in the provision of each module. The university has asked for your help in deciding on the number of students that should be recruited to each module.

Required

(a) State which costs are relevant to the decision as to how many students to recruit to each module.

(b) Determine how many students the university should recruit to each module to ensure that each module breaks even.

(c) What is the margin of safety if the university recruits 25 students to each module?

(d) Calculate the profit or loss the university will make on each module if 14 students or 30 students are recruited to each module.

(e) What will the break-even point be if the university decides to charge £340 per module instead of £400?