Question
A local skating rink charges each person $5 to skate and another $3 for each skate rental. The rink has determined that on a daily
A local skating rink charges each person $5 to skate and another $3 for each skate rental. The rink has determined that on a daily basis, when 100 tickets are sold, the costs per skater are $.50 for variable costs and $1 for fixed overhead costs. The rink has the capacity for up to 175 skaters per day. A local kids day camp has asked the rink to allow up to 35 children to skate for $2.50 each on July 15. This price would include the cost of a skate rental. During July, the rink averages 100 skaters per day.
Required:
A. | What are the total relevant costs of accepting the special order? |
B. | From a quantitative basis, should they accept the special order? By what amount will the rinks net income increase or decrease if they accept the special order? |
C. | List two qualitative factors that should be considered by the rink before accepting the special order?
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