Question

Baird Camps, Inc. leases the land on which it builds camp sites. Baird is considering opening a new site on land that requires $3,400 of rental payment per month. The variable cost of providing service is expected to be $6 per camper. The following chart shows the number of campers Baird expects for the first year of operation of the new site:

Jan.	Feb.	Mar.	Apr.	May	June	July	Aug.	Sept.	Oct.	Nov.	Dec.	Total
410	390	400	420	760	660	800	810	500	530	650	470	6,800

Required

Assuming that Baird wants to earn $10 per camper, determine the price it should charge for a camp site in February and August. (Do not round intermediate calculations.)

Answer 1

Total amount required in February = Fixed rental + Number of campers * Variable cost + Profit per camper* number of camper

= 3400 + 390 * 6 + 390 *10

= 9640

Amount to be charged per camper = 9640 / 390 = $24.72

Total amount required in August = Fixed rental + Number of campers * Variable cost + Profit per camper* number of camper

= 3400 + 810 * 6 + 810 *10

= 16360

Amount to be charged per camper = 16360/810 = $20.20