Question

The exclusive Swink Golf Driving Range has had a standard price of ​$16.00 per hour. The facility has 30 golfing​ stations, with average usage of 40​%, 9 hours a​ day, 7 days a week. Morgan​ Swink, the​ owner, would like to enhance revenue. He proposes new pricing at ​$12 per hour on weekdays and ​$23 per hour on weekends. He estimates that weekday usage will increase to 50​% and weekend usage will remain at 40​%, even with the price increase. Variable cost is a consistent ​$3 per hour. Which strategy is​ better? Total revenue under the current pricing is ​$ nothing ​(round your response to the nearest​ dollar).

Answer 1

The strategy of total revenue under new pricing is better because it has $ 972 more than current pricing policy

Step-by-step explanation:

Total revenue under current pricing per week = Average usage % * Number of golfing station* Price per hour * number of hours per day * number of days per week

=
`(40)/(100)` * 30 * $16 * 9 * 7

= $ 12,096

Total revenue under new pricing per week = Weekday revenue + Weekend revenue

= (Average usage % * Number of golfing station* Price per hour * number of hours per day * number of weekdays per week) + (Average usage % * Number of golfing station* Price per hour * number of hours per day * number of weekends per week)

= (
`(50)/(100)` * 30 * $12 * 9 * 5) + (
`(40)/(100)` * 30 * $23 * 9 * 2)

= $ 8,100 + $ 4,968

= $ 13, 068