Question
Endothon Tour Company operates a small tour with only one tour bus that takes tourists around Canyonlands National Park in southeast Utah. Because of a
Endothon Tour Company operates a small tour with only one tour bus that takes tourists around Canyonlands National Park in southeast Utah. Because of a constraint in its design, Endothons bus can be configured to seat 10 premium seats or 20 economy seats, but there cannot be any mixture. Endothon must decide whether to operate a premium tour (with 10 seats per tour) or an economy tour (with 20 seats per tour).
Here are the revenues and costs associated these two configurations:
Premium | Economy | |
Drivers, fuel, bus depreciation | $500 per tour | $500 per tour |
Selling price | $150 per passenger | $50 per passenger |
Food costs | $80 per passenger | $5 per passenger |
Endothon is currently operating a premium tour.
How much would the net income per tour change if Endothon were to switch to having an economy tour?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started