Because of unpredictable student enrollment, the local community college leases classroom space and hires adjunct professors to teach multiple sections of introductory English and mathematics courses. The college requires that each course section taught have a minimum of 6 and a maximum of 25 students.
The scenario in the preceding paragraph introduces the interesting possibility that an organization may break even at more than one volume of sales. Whenever an organization’s fixed costs change, the breakeven point changes. Fixed costs, in the community college example, would be classroom leases and adjunct professor salaries. For the college, the relationship is a circular one. If more students enroll, the ...
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