Answer:
The correct answer is B. about 34
Explanation:
1. Let's review the information given to us to answer the question correctly:
Segment size = 5,000
Number of participants in the camp = 2% of 5,000 = 100
Total Fixed Cost (TFC) = $ 10,000
Variable Cost per Person = $ 5
Price per Person = $ 80
2. Based on the assumption provided above, how many more participants do we need to break-even?
We can calculate the variable cost, this way:
Total Variable Cost = Variable cost per person * Number of participants
Total Variable Cost = $ 5 * 100
Total Variable Cost = $ 500
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 = $ 500 + $ 10,000
Total cost of the program = $ 10,500
We can calculate the revenue of the program, this way:
Total revenue of the program = Price per person * Number of participants
Total revenue of the program = $ 80 * 100
Total revenue of the program = $ 8,000
Number of additional participants needed to get break-even = x
Break-Even Point: Total Cost = Total Revenue
Total Variable cost + Total Fixed Cost = Price per person * Number of participants
Replacing with the values we know and solving for x:
5 * (100 + x) + $ 10,000 = 80 * (100 + x)
500 + 5x + 10,000 = 8,000 + 80x
5x - 80x = 8,000 - 10,500
-75x = - 2,500
x = - 2,500/-75
x = 34 (rounding to the next whole)
The correct answer is B. about 34