Mrs Bland owns a small boarding house at a seaside resort. She takes up to 20 guests during the 'season' which lasts 14 weeks, and averages 15 guests per week who each pay £25 per week. The house, bought with her late husband's insurance monies, cost £14,000 in 1972. She occupies two rooms in the house herself, and during the season eats with the guests.

Food Waitresses/cleaners Laundry Heating and lighting Depreciation of furniture, etc.
Rates Telephone, advertising, postage, etc.
Average total costs for Annual costs 1 week in season £ £
80 22 10 8 250 350 150 120 750 Required:

(a) Estimate the annual profit, making any assumptions you think appropriate.

(b) What is the minimum average numbe r of guests per week to just break even, and what is the average total cost per week per person?

(c) Some pensioners want to come for a week out of season. What is the minimum price Mrs Bland could charge?

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Food Waitresses/cleaners Laundry Heating and lighting Depreciation of furniture, etc. Rates Telephone, advertising, postage, etc. Average total costs for Annual costs 1 week in season 82080 22 10 250 350 150 120 750