Rolling Hills Golf Association is a nonprofit. private organization that operates three 18...

Rolling Hills Golf Association is a nonprofit. private organization that operates three 18-hole golf courses north of Philadelphia. The organization’s financial director has just analyzed the course maintenance costs incurred by the golf association during recent summers. The courses are maintained by a full-time crew of four people, who are assisted by part-time employees. These employees are typically college students on their summer vacations. The course maintenance costs vary with the number of people using the course. Since a large part of the maintenance work is done by part-time employees, the maintenance crew size can easily be adjusted to reflect current needs. The financial director’s analysis revealed that the course maintenance cost includes two components:

1. A fixed component of $12.000 per month (when the courses are open).

2. A step-variable cost component. For each additional 1 to 10 people teeing off in one day. $20 in costs are incurred, Thus, if 101to 110 people tee off, $220 of additional cost will be incurred. If 111 to 120 people tee off, $240 of additional cost will be incurred.

Required:

1. Draw a graph of Rolling Hills Golf Association’s course maintenance costs. Show on the graph the fixed-cost component and the step-variable cost component. Label each clearly.

2. Use a semivariable-cost behavior pattern to approximate the golf association’s course maintenance cost behavior. Visually fit the semivariable cost line to your graph.

3. Using your graph, estimate the variable- and fixed-cost components included in your semivariable approximation. Express this approximate cost behavior pattern in equation form.

4. Fill in the following table of cost predictions.