Answers
- Calculation of variable cost
Variable Cost = Food items + individual life vests + individual sunscreen, tissue, and first-aid kits + wages of the river guide
Variable Cost = 10 + 16 + 6 + 6
Variable Cost = $38 per person
- Calculation of Fixed cost
Fixed cost = License fees + kayal rent + office rent + accounting services + internet and mobile exp.
Fixed cost = 500 + 4000 + (1000 x 4months) + 2000 + 800
Fixed cost = $11300 (summer period)
- Break even point
Break even point = Fixed Cost / contribution per unit
Break even point = 11300 / 0.62
Break even point = 183 persons
Note : Contribution per unit = sale price per unit - variable cost per unit
Contribution per unit = 100 - 38
Contribution per unit = $ 62
- Calculation of number of people DAN has to serve, If Dan wants to earn $40000 profit
Sale to earn $40000 profit = (fixed cost + desired profit) / CMP Ratio
Sale to earn $40000 profit = (11300 + 40000) / 62%
Sale to earn $40000 profit = 513000 / 62%
Sale to earn $40000 profit = $ 82742 (approx)
Number of customer to serve to earn $40000 profit = Total Revenue / Sale price
Number of customer to serve to earn $40000 profit = 82742 / 100
Number of customer to serve to earn $40000 profit = 828 Person (answer cannot be decimal because cannot count person as half)
Note : CMP Ratio = (sale price - variable cost) / sale price
CMP Ratio = (100 - 38) / 100
CMP Ratio = 62 / 100
CMP Ratio = 0.62
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