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 - 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

To solve this problem, we need to calculate the total costs incurred by the company and add the desired profit per customer to determine the price per customer.

From the information given, we can calculate the total costs for each period:

January - June: 500 customers * $500 cost per customer = $250,000
July - December: 1,500 customers * $500 cost per customer = $750,000

Next, we can calculate the total revenue needed to earn the desired profit of $100 per customer:

January - June: 500 customers * ($500 cost per customer + $100 profit per customer) = $300,000
July - December: 1,500 customers * ($500 cost per customer + $100 profit per customer) = $1,200,000

Now we can add the total costs and desired profits to determine the total revenue needed for the year:

$250,000 + $750,000 + $300,000 + $1,200,000 = $2,500,000

Finally, we can divide the total revenue by the total number of customers expected for the year to determine the price per customer:

$2,500,000 / 2,000 customers = $1,250

Rounding to the nearest dollar, we get a price of $650 per customer, which is answer choice C.

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