For many years the Honey Lake Summer Camp had used the number of campers per wee
ID: 2445779 • Letter: F
Question
For many years the Honey Lake Summer Camp had used the number of campers per week to estimate weekly costs. The summer camp is open for ten weeks during the summer with a different number of campers each week. Costs from last year’s summer camp are used to estimate costs for this year for pricing purposes. Camp counselors are plentiful and the job is fun, so they only hire as many as they need each week. The following costs occurred during a slow week last year and the costs of each cost category are expected to be the same this year:
Weekly Cost
Supervisor's salary (hired weekly) $ 500
Cook's salary (hired weekly) 400
Camp counselor salaries (1 for each occupied cabin, each of
which hold 10 campers) (5 counselors × $200/counselor) 1,000
Food (50 campers × $100/camper) 5,000
Supplies (50 campers × $20/camper) 1,000
Utilities (50 campers × $10/camper) 500
Insurance (50 campers × $20/camper) 1,000
Property tax ($10,000/10 weeks) 1,000
Weekly total $10,400
Average cost per camper: $10,400/50 campers = $208/camper
The Honey Lake Summer Camp expects 65 campers during the second week of July.
a. Using the average cost per camper, what is the expected total cost of a 65 camper week?
b. What is the expected total cost of that week calculated using ABC?
C. The last week of August is always a very slow week, with an average of only 12 campers, paying $400 each. Using ABC, how much is their profit (loss) for that week?
d. Ignoring any marketing issues, how much would they save (lose) compared to staying open by canceling the last week of August?
Explanation / Answer
a) the expected total cost of a 65 camper week is= $208 X 65 =$ 13520
Because cost of each catogery is same as last year
b)
Supervisor's salary (hired weekly) $ 500
Cook's salary (hired weekly) 400
Camp counselor salaries (1 for each occupied cabin, each of
which hold 10 campers) (7 counselors × $200/counselor) 1,400
Food (65 campers × $100/camper) 6500
Supplies (65 campers × $20/camper) 1300
Utilities (65 campers × $10/camper) 650
Insurance (65 campers × $20/camper) 1300
Property tax ($10,000/10 weeks) 1,000
total cost is $13050
c)
Supervisor's salary (hired weekly) $ 500
Cook's salary (hired weekly) 400
Camp counselor salaries (1 for each occupied cabin, each of
which hold 10 campers) (1counselors × $200/counselor) 200
Food (12 campers × $100/camper) 1200
Supplies (12 campers × $20/camper) 240
Utilities (12 campers × $10/camper) 120
Insurance (12 campers × $20/camper) 240
Property tax ($10,000/10 weeks) 1,000
total cost is $3900
average cost= 3900/12 =325 each
Profit is $400 - $325= $75
d) They will loose $75
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