Rainbow Tours gives walking tours of Springfield. Rainbow charges $20 per person for the tour and incurs

Question:

Rainbow Tours gives walking tours of Springfield. Rainbow charges $20 per person for the tour and incurs $8 in variable costs for labor, drinks, and maps. The monthly fixed costs for Rainbow Tours are $1,800.

Required:

a. How many tours must Rainbow sell every month to break even?

b. Rainbow Tours’s owner believes that 200 people a month will sign up for the walking tour.
What is the margin of safety in terms of the number of people signing up for the tour?

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