Wombat World is a small zoo displaying native animals. The entrance fee is $15 per person. Variable costs of running the zoo are $8 per visitor and fixed costs are $200,000 per annum. The number of visitors that would be needed to make a profit of $20,000 per annum is:

Question

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To make a profit of $20,000, the total profit equation is: Profit = Revenue - Total Costs. Revenue per visitor is $15, and variable costs are $8 per visitor, leaving a contribution margin of $7 per visitor. The fixed costs are $200,000, and the desired profit is $20,000, so the total amount needed is $220,000. Dividing this by the contribution margin ($220,000 / $7) gives 31,429 visitors.

Wombat World Is a Small Zoo Displaying Native Animals