14.Ross Recreations Company, LLC operates a summer camp in Monterey, Tennessee.

Question

14.Ross Recreations Company, LLC operates a summer camp in Monterey, Tennessee. The cost data for a 12-week summer camp are as follows. Charge per camper Variable cost per camper $220/week Fixed costs Capacity per week $400/week - $240,000 per summer season = 200 campers Determine (a) The total number of campers to breakeven for the season. (b) The profit if the camp is operated at 90% capacity. (c) The additional profit that can be made if a discount of $100 per week is given for another 10 campers.

Explanation / Answer

Ans:

Contribution per camper = Charge per camper - variable cost per camper

                                        = $400 - $220

                                        = $180 per camper

a) Total number of campers to breakeven = fixed cost / Contribution per camper

                                                                   = $240,000 / $180

                                                                   = 1334 campers

    b) Calculation of profit if camp is operated at 90% capacity.i.e(12 * 200* 90% =2160 campers)

c) Additional profit = Revenue - variable cost - fixed cost

                              = (10 * $300) - ($220 * 10) - 0

                              = $3000 - $2200 - 0

                              = $800

Particulars Amount Revenue(2160 * $400 ) $864,000 Less: Variable cost (2160 * $220) ($475,200) Less: Fixed cost ($240,000) Profit $148,800

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