Slopeside Resort, a lodge located in a fastgrowing ski resort, is planning to open its new wing this coming winter, increasing the number of beds by 40 percent. Although variable costs per guest-day will remain unchanged, total fixed costs will increase by 25 percent. Last year’s costs follow:
Variable Costs........................................................ $50,000
Total Fixed Costs................................................... 30,000
a. Sketch the cost function.
b. Calculate the additional fixed operating costs that Slopeside Resort will incur next year.