I can't figure out how you find the break-even quantity with a mixed cost. Here is the problem:
LOST sponsors a 5-day camping trip. LOST provides a $3,000 grant and collects $350 per camper. The program expects 150 campers and the following expenses: Campground fees, $6,500 for 3 days, Transportation fees $3925 with 60 person capacity, Outdoor equipment rental $45 per camper, meals $55 per camper per day. Determine the break-even number of campers.
Can you help?
Comments
Jessica,
Can you double-check your facts? I calculate higher variable costs than fees per camper which means their is a negative contribution margin and no chance for break-even except by cancellation of the program. See if I misunderstood something:
meals $55/camper/day, 5 days, $275 per camper for food for five days
equipment rental $45 per camper for five days
transportation $3,925 for 60, or $65.42 per camper if bus is FULL
for a total of $385.42 cost per camper before allocating for campground rental. Since they only charge $350 per head and the campground rental for only 3 days is more than the grant amount - this looks like a losing proposition to me. Have I misunderstood something?
Hey Jack,
Thanks for the response. I double-checked the information and what I posted earlier is correct. Perhaps the purpose of this problem is to recognize that expenses exceed revenue and therefore there is no break-even. Thanks for your help!