A local skating rink charges each person $5 to skate and another $3 for each skate rental.The rink has determined that on a daily basis,when 100 tickets are sold,the costs per skater are $.50 for variable costs and $1 for fixed overhead costs.The rink has the capacity for up to 175 skaters per day.A local kid's day camp has asked the rink to allow up to 35 children to skate for $2.50 each on 15 July.This price would include the cost of a skate rental.During July,the rink averages 100 skaters per day.
Required:
A. List two qualitative factors that should be considered by the rinls before accepting the special order.
B. What are the total relevant costs of accepting the special order?
C. From a quantitative basis, should they accept the special order? By what amount will the rink's net income increase or decrease if they accept the special order?

Question

A local skating rink charges each person $5 to skate and another $3 for each skate rental.The rink has determined that on a daily basis,when 100 tickets are sold,the costs per skater are $.50 for variable costs and $1 for fixed overhead costs.The rink has the capacity for up to 175 skaters per day.A local kid's day camp has asked the rink to allow up to 35 children to skate for $2.50 each on 15 July.This price would include the cost of a skate rental.During July,the rink averages 100 skaters per day.
Required:
 A. List two qualitative factors that should be considered by the rinls before accepting the special order.
B. What are the total relevant costs of accepting the special order?
C. From a quantitative basis, should they accept the special order? By what amount will the rink's net income increase or decrease if they accept the special order?

Quizplus · Accepted Answer

The Answer of A local skating rink charges each person $5 to skate and another $3 for each skate rental.The rink has determined that on a daily basis,when 100 tickets are sold,the costs per skater are $.50 for variable costs and $1 for fixed overhead costs.The rink has the capacity for up to 175 skaters per day.A local kid's day camp has asked the rink to allow up to 35 children to skate for $2.50 each on 15 July.This price would include the cost of a skate rental.During July,the rink averages 100 skaters per day.
Required:
 A. List two qualitative factors that should be considered by the rinls before accepting the special order.
B. What are the total relevant costs of accepting the special order?
C. From a quantitative basis, should they accept the special order? By what amount will the rink's net income increase or decrease if they accept the special order?

A Local Skating Rink Charges Each Person $5 to Skate