Kim is a driving instructor. Kim charges £30 for a one-hour lesson. Her fixed costs are £14,000 per annum. The variable cost for a one-hour lesson is £6. How many one-hour lessons will Kim need to give before making a profit? A 389 lessons B 467 lessons C 584 lessons D 2334 lessons Your answer

GCSE OCR Business Break-even: Kim is a driving instructor. Kim

Kim is a driving instructor - OCR - GCSE Business - Question 6 - 2021 - Paper 1

Question 6

Kim is a driving instructor. Kim charges £30 for a one-hour lesson. Her fixed costs are £14,000 per annum. The variable cost for a one-hour lesson is £6. How many o... show full transcript

Worked Solution & Example Answer:Kim is a driving instructor - OCR - GCSE Business - Question 6 - 2021 - Paper 1

Step 1

Calculate Profit Threshold

96%

114 rated

Answer

To determine how many lessons Kim needs to give to make a profit, we must first establish the total costs and the income per lesson.

The fixed costs are £14,000. The variable cost per lesson is £6, and since she charges £30 per lesson, the profit per lesson is given by:

ext{Profit per lesson} = ext{Charge} - ext{Variable Cost} = £30 - £6 = £24

Step 2

Set Up Profit Equation

99%

104 rated

Answer

To find the break-even point (where profit is zero), we set up the following equation:

ext{Total Costs} = ext{Number of Lessons} imes ext{Profit per Lesson}

Replacing the values we know:

£14,000 = n imes £24

where n is the number of lessons.

Step 3

Solve for Number of Lessons

96%

101 rated

Answer

Now we can solve for n:

n = rac{£14,000}{£24}

Calculating this gives us:

n = 583.33 ext{ lessons}

Since Kim cannot give a fraction of a lesson, we round up to the nearest whole number, resulting in 584 lessons.

Step 4

Conclusion

98%

120 rated

Answer

Hence, Kim will need to give a minimum of 584 lessons before making a profit.

Kim is a driving instructor - OCR - GCSE Business - Question 6 - 2021 - Paper 1

Worked Solution & Example Answer:Kim is a driving instructor - OCR - GCSE Business - Question 6 - 2021 - Paper 1

Calculate Profit Threshold

Set Up Profit Equation

Solve for Number of Lessons

Conclusion

Join the GCSE students using SimpleStudy...