Yankee Tours provide seven-day guided tours along the New England coast.The company pays its guides a total of $100,000 per year.The average cost of supplies,lodging and food per customer is $500.The company expects a total of 500 customers during the period January through June,and a total of 1,500 customers from July through December.Yankee wants to earn $100 income per customer.For promotional reasons the company desires to charge the same price throughout the year.Based on this information,what is the correct price per customer? (round to nearest dollar)

Question

Quizplus · Accepted Answer

Total costs for the year = Variable costs + Fixed costs
Total costs for the year = [(500 customers + 1,500 customers)x $500 per customer] + $100,000 = 2,000 customers x $500 per customer + $100,000 = $1,100,000
Average costs per customer = $1,100,000 ÷ 2,000 customers = $550
Net income per customer = Price per customer - Average cost per customer
$100 per customer = Price per customer - $550 per customer
Price per customer = $100 per customer + $550 per customer = $650 per customer

Yankee Tours Provide Seven-Day Guided Tours Along the New England