Question

Perez Camps, Inc. leases the land on which it builds camp sites. Perez is considering opening a new site on land that requires $4,800 of rental payment per month. The variable cost of providing service is expected to be $4 per camper. The following chart shows the number of campers Perez expects for the first year of operation of the new site:

Jan Feb  Mar Apr  May June July Aug Sept Oct Nov Dec

370 370 380 400 700 640 780 790 480 510 530 450 Total- 6,400

Required:  

Assuming that Perez wants to earn $9 per camper, determine the price it should charge for a camp site in February and August. (Do not round intermediate calculations.)

Answer 1

Calculation of price in February ( 370 Units)
Required profit (9*370)	3330
Fixed Cost	4800
Let the selling price=x
total sales revenue= 370*x
Variable cost(4*370)	1480
Now,
Sales-Variable cost= Fixed cost+Profit
370x-1480=3330+4800
370x= 3330+4800+1480
370x=9610
selling price (x)= 9610/370
selling price (x)= $ 25.973 per unit
Calculation of price in August (790 units)
Required profit (9*790)	7110
Fixed Cost	4800
Let the selling price=x
total sales revenue= 790*x
Variable cost(4*790)	3160
Now,
Sales-Variable cost= Fixed cost+Profit
790x-3160=7110+4800
790x=7110+4800+3160
790x=15070
selling price (x)= 15070/790
selling price (x)= $ 19.076 per unit