how do i find price?

Question

Sparta Camps, Inc., leases the land on which it builds camp sites. Sparta is considering opening a new site on land that requires $3,000 of rental payment per month. The variable cost of providing service is expected to be $4 per camper. The following chart shows the number of campers Sparta expects for the first year of operation of the new site.

Jan. 200, Feb. 150, Mar. 300, Apr. 300, May 300, june 500, july 700, aug 750, sep 450, oct 250, nov 50, dec 250, total 4,200

Assuming that Sparta wants to earn $10 per camper, determine the price it should charge for a camp site in February and August.

Computation of Fixed Cost Per Unit:

Land Cost Per Camper = 3,000$ ×12 / 4200 = 8.57

Price = ?

Answer 1

In Feb, there will be 150 campers, so variable cost is $4 x 150 = $600, plus the fixed cost of $3,000 = $3,600 total cost. Divide that by 150 and cost per camper = $24. If Sparta wants to earn $10 per camper, it should charge $34 per camper in Feb.

In Aug, there will be 750 campers, so variable cost is $4 x 750 = $3,000, plus the fixed cost of $3,000 = $6,000 total cost. Divide that by 750 and cost per camper = $8. If Sparta wants to earn $10 per camper, it should charge $18 per camper in Aug.