Question

A non-profit program for youths sends students to summer camp. The price of the program is $800 per student, and there are 8 students that can participate in each program. Each program runs for 11 days. The price for all food and equipment is $100 per student per day. Also, the two program guides cost $150 a day to hire.

a. What is the profit margin for the program?

b.The non-profit was able to get a grant to cover $200 per student per day. Will this be enough to cover the full cost of the program?

c. Given the cost of the program, if the non-profit secured the grant, would you recommend they continue to operate the program based on the economics?

Answer 1

Price of Program = $800 per student (Revenue)

No of Students that can participate in each program = 8 (Total possible revenue = 8*800 = $6400

Program run days = 11 days

Cost/Price for food and equipment = $100 per student per day

Food and Equipment cost = 11 days * $100 * 8 students = $8800

Program Guide cost = $150 a day to hire "The WORD EACH IS MISSING HENCE $150 is for both guides combined (The doubt is this is for two guides or each guide?). I'll go with both guide i.e. total $150 per day (Dear student, if the $150 involves each guides kindly consider this value to be $300 instead per day)

Total cost of guides = 11 days * $150 = $1650

Total Revenue= $6400

Total Cost = $1650 + $ 8800 = $10,450

(a) Profit Margin = (Revenue - Cost )/Revenue = ($6400-10450)/($6400) = -0.63% or Negative 63%

(b) Grant $200 per student per day

Additional Revenue = 8*11*200 = $17,600

Total Revenue = 17600+6400 = $24,000

Total Cost = $ 10,450

Therefore the program can be run

(c) Yes with the non profit grant the recommendation would be to continue the operation