Question

Camp Rainbow offers overnight summer camp programs for children ages 10-14 every summer during June and July. Each camp session is one week and can accommodate up to 200 children. The camp is not coed, so boys attend during the odd-numbered weeks and girls attend during the even-numbered weeks. While at the camp. participants make crafts, participate in various sports, help care for the camp's resident animals, have cookouts and hayrides, and help assemble toys for local underprivileged children. The camp provides all food as well as materials for all craft classes and the toys to be assembled. One cabin can accommodate up to 10 children, and one camp counselor is assigned to each cabin. Three camp managers are on-site regardless of the number of campers enrolled. The results of the least-squares regression of the number of campers and the cost to run camp are given below. Following is the cost Information for Camp Rainbow's operations last summer. Number of cost to Week Campers Run Camp 1 90 $8,050 2 118 8,460 3 156 10,960 174 1,100 5 188 13,670 6 14,300 170 12,325 e 11,270 Coetticienta Intercept 1876.55 X Variable 60.73 Suppose that Rainbow is contemplating staying open one additional week during the summer. Required: 1. Using the results of the least squares regressionanaysis, determine Rainbows contribution margin per camper i each camper pays $175 to attend the camp for a week 2. Using the results of the least squares regression analysis, prepare a contribution margin income statement for week 9 assuming Rainbow expects to have 170 campers that week 3. Should Rainbow add a ninth week to its schedule? Complete this question by entering your answers in the tabs below. Required Required Required 2 3 Using the results of the least squares regression analysis, determine Rainbow's contribution margin per camper if each camper pays $175 to attend the camp for a week (Roynd your unit contribution margin and contribution margin ratio to two decimal places C. 1234 1234 %) Show less Un contribution Marc Contribution Mango Ratio Eare

Answer 1

1. Using the results of the least-squares regression analysis, determine Rainbow's contribution margin per camper if each camper pays $175 to attend the camp for a week:

Particulars	Amount ($)
Selling Price	175
Less: Variable Cost	60.73
Contribution per unit (campers)	114.27
Contribution Margin Ratio (114.27/175)	65.30%

Contribution Margin Ratio = (Contribution/selling Price)

2. Income Statement for the week 9, with 170 campers:

Particulars	Amount ($)
Selling Price (175 * 170)	29,750.00
Less: Variable Cost (60.73 * 170)	10,324.10
Contribution (114.27 * 170)	19425.90
Less: Fixed Cost	1876.55
Net Income	17549.35

3. Yes, the Rainbow should add 9^th week to the camp as it will generate cash for the camp.