Question

Two new rides are being compared by a local amusement park in terms of their annual operating costs. The Tummy Tugger has fixed costs of $10,000 per year and variable costs of $2.50 per visitor. The Head Buzzer has fixed costs of $4,000 per year and variable costs of $4 per visitor. Answer the following questions for the amusement park to make the needed comparison.

1. What is the total cost for the Tummy Tugger if 5,000 visitors ride it?
A) $12,500
B) $22,500
C) $20,000
D) $15,000
2. What is the total cost for the Head Buzzer if 3,000 visitors ride it?
A) $16,000
B) $15,000
C) $14,000
D) $12,000
3. Which ride has lower variable costs per visitor?
A) Tummy Tugger
B) Head Buzzer

Answer 1

The total cost for the Tummy Tugger with 5,000 visitors is $22,500. For the Head Buzzer with 3,000 visitors, it is $16,000. The Tummy Tugger has lower variable costs per visitor at $2.50.

Step-by-step explanation:

To calculate the total cost for the Tummy Tugger with 5,000 visitors, we add the fixed costs to the variable costs multiplied by the number of visitors. The formula is: Total Cost = Fixed Costs + (Variable Cost per Visitor × Number of Visitors). Substituting the given numbers, we get: Total Cost = $10,000 + ($2.50 × 5,000) = $10,000 + $12,500 = $22,500. So, the correct answer is option B) $22,500.

For the Head Buzzer with 3,000 visitors, using the same formula: Total Cost = $4,000 + ($4.00 × 3,000) = $4,000 + $12,000 = $16,000. The correct answer is option A) $16,000.

Comparing the variable costs per visitor between the two rides, the Tummy Tugger has a lower variable cost of $2.50 per visitor, whereas the Head Buzzer has a higher variable cost of $4 per visitor. Therefore, the correct answer is A) Tummy Tugger.