Dan runs a high adventure, water-rafting experience on the Snake River in Wyoming. Dan is reviewing his pricing schedule for the upcoming season [summer of 2016]. Some of his costs can be applied to each individual customer that signs-up for trips. These include food items such as water and snack items [$10.00/person], individual life vests [$16.00/person]; and, individual sunscreen, tissue, and first-aid kits [$6.00/person], and the wages of the river guide on each trip which runs $6.00 per person/trip. He also has predictable costs such as licensing fees of $500; Kayak rentals $4,000, office rental $1000/month for 4 months; accounting services $2,000, and his Internet and mobile services expenses $800.
If Dan prices his 1 hr.- adventure at $100/customer, how many persons must take the trip in order for Greg to break-even? SHOW YOUR WORK
Calculate the Variable Costs. Variable Costs = $_______________
Calculate the Fixed Costs. Fixed Costs = $________________
Calculate Break/Even in Units (in this case, the number of clients that Dan must serve in order to cover (both) variable costs and fixed costs, but not make a profit.
B/E = $_________/ _________ =
= persons (we always round-up because we cannot serve part of a unit
How many people must Dan served during his four month summer period in order to make a $40,000 profit, above his break/even point? How would you quickly figure this?