Beball camp example covered in the class, let's assume the segment size is 9000, price per participant is $90, frequency is 1, variable cost per person is $5, TFC = $9,000. Based on the assumption provided above, what percentage of the segment should participate if the program wants to make $1500 profit?

Question

Business

Grant Pineda

6 December, 02:22

Beball camp example covered in the class, let's assume the segment size is 9000, price per participant is $90, frequency is 1, variable cost per person is $5, TFC = $9,000. Based on the assumption provided above, what percentage of the segment should participate if the program wants to make $1500 profit?

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Answers (1)

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Dulce Shaffer · Answer 1

About 1.37

Explanation:

Given that

Segment size = 9000

TFC = $9000

VC per person = 5

Price per person = 90

Profit = 1500

Let y he number of participants in the camp

Thus,

Variable cost = variable cost per person * no. Of participants

VC = 5 * y

VC = 5y

Also,

TC = TFC + TVC

TC = 9000 + 5y

The next thing to calculate for is total revenue

Total revenue of the program = Price per person * No. of participants + Profit

Total revenue of the program = 90 * y + 1,500

Total revenue of the program = 90y + 1,500

For break even

TC = price per person * no. of participants

9000 + 5y = 90y

9000 = 90y - 5y

9000 = 85y

y = 9000/85

y = 105.88

y = 106 approximately.

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)