Question

ABC company offers tours of spectacular tourist destinations such as Chicago and New York. The tours usually have between 5 and 50 people on them.   For each person who goes on the trip, the company incurs $10 per day in food cost, $50 per day in lodging, and $25 per day in entrance admissions and fees. Also, the company incurs a certain total cost per day for transportation, regardless of whether the tour is full or not.    On the last tour, the total cost to the company per person per day was $100. There were 30 people on the tour. If the next tour has 20 people, what will be the cost per person per day?

Answer 1

• All working forms part of the answer

	Cost per person per day
Food cost	$                10.00
Lodging	$                50.00
Admission & Fees	$                25.00
Total variable cost per person per day	$                85.00
Last tour total per person per day	$              100.00
Fixed cost per person per day [$100 - $85]	$                15.00
Total fixed cost for 30 people on last tour [30 x $15]	$              450.00
Fixed cost per 20 person in next tour [$450/20 person]	$                22.50
(+) total variable cost per person per day	$                85.00
Cost per person per day for Next tour $22.5 + $85]	$              107.50