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Exercise 2-15A Averaging costs LO 2-5 Zachary Camps, Inc. leases the land on which it builds camp sites. Zachary is consideri

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Answer #1

Fixed cost (rent)= $4,800 per month

Variable cost per campers = $4

Profit per campers = $9

Let the price to be charged in February be $Y per camper

Profit = Sales - Variable cost - Fixed cost

370 x 9 = 370Y- 370 x 4 - 4,800

3,330 = 370Y - 1,480-4,800

Y = $25.97297297297

Hence, price to be charged in February = $25.97297297297 per camper

Price to be charged for a camp site in February = Number of campers in February x Price per camper

= 370 x 25.97297297297

= $9,610

Let the price to be charged in August be $Z per camper

Profit = Sales - Variable cost - Fixed cost

790 x 9 = 790Z - 790 x 4 - 4,800

7,110 = 790Z - 3,160-4,800

Z = $19.075949367088

Hence, price to be charged in August = $19.075949367088 per camper

Price to be charged for a camp site in August = Number of campers in August x Price per camper

= 790 x 19.075949367088

= $15,070

Kindly comment if you need further assistance. Thanks

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