Answer:
<u>The correct answer is D. About 1.37%</u>
Explanation:
1. Let's review the information given to us to answer the question correctly:
Segment size = 9,000
Number of participants in the camp = x
Total Fixed Cost (TFC) = $ 9,000
Variable Cost per Person = $ 5
Price per Person = $ 90
Profit = $ 1,500
2. Based on the assumption provided above, what percentage of the segment should participate if the program wants to make $1500 profit?
We can calculate the variable cost, this way:
Total Variable Cost = Variable cost per person * Number of participants
Total Variable Cost = $ 5 * x
Total Variable Cost = $ 5x
We can calculate the total cost of the program, this way:
Total Cost of the program = Total Variable cost + Total Fixed Cost
Total Cost of the program = $ 5x+ $ 9,000
Total cost of the program = $ 9,000 + 5x
We can calculate the revenue of the program, this way:
Total revenue of the program = Price per person * Number of participants + Profit
Total revenue of the program = $ 90 * x + $ 1,500
Total revenue of the program = $ 90x + $ 1,500
For Break-even:
Total Variable cost + Total Fixed Cost = Price per person * Number of participants
Replacing with the values we know and solving for x:
9,000 + 5x = 90x
5x - 90x = - 9,000 (Like terms)
-85x = -9,000
x = -9,000/-85
x = 106 (rounding to the next whole)
For $ 1,500 of profits:
Number of participants at break-even + Profits/Price per participant
106 + 1,500/90 = 106 + 16.7 = 123
123/1,500 = 0.0137 = 1.37% (Rounding to two decimal places)
<u>The correct answer is D. About 1.37%</u>
