In the last financial year, during its busiest month, the Outback Tours company took 12,000 guests on its tours and incurred total costs of $28,000. During its quietest month it had 8,000 guests and its costs were $20,000. How much are Outback Tours monthly fixed costs?

Question

Quizplus · Accepted Answer

The difference in guests between the busiest and quietest months is 4,000 (12,000 - 8,000), and the difference in costs is $8,000 ($28,000 - $20,000). This means the variable cost per guest is $2 ($8,000 / 4,000 guests). To find the fixed costs, we can subtract the total variable costs in one of the months from the total costs for that month. For the quietest month (8,000 guests), the total variable costs are 8,000 guests * $2/guest = $16,000. Subtracting this from the total costs of $20,000 gives fixed costs of $4,000.

In the Last Financial Year, During Its Busiest Month, the Outback