Question

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.)

Answer 1

The correct price per customer is $650

Step-by-step explanation:

The computation of the correct price is shown below:

= Fixed cost + expected number of customers + net income per customer

where,

Fixed cost per customer = Total cost ÷ (total customers + expected customers)

= $100,000 ÷ (1,500 + 500)

= $50

The other values would remain the same

Now put these values to the above formula

So, the value would equal to

= $50 + $500 + $100

= $650 per customer