1. What are the total variable costs for the trip?							Total variable cost for the trip ($40*8) +$168*6 = $2928
2. What are the average variable costs (per person) for the trip?							Total fixed costs for the trip ($40*8) + $168 = $488
3. What are the total fixed costs for the trip?							$1400 +$270 = $1670
4. What are the average fixed costs (per person) for the trip?							Average fixed costs = $1,670/6 = $278.33
5. What are the average costs per person for the trip?							Average costs per person for the trip $488 + $278.33 =$766.33
6. What would the trip cost Glenda if she were to go alone?							$488 +$1,670 = $2,158
7. What additional costs would be incurred if a 7th girl was invited on the trip? Would this be a wise decision     (from a cost perspective)? Why or why not?
8. Which cost will not be affected if a 7th girl was invited on the trip?

 

7. What additional cost would be incurred if…….?

• The gasoline cost and rental cost will be incurred if the 7th girl was invited because they have to rent a new higher capacity car that can fit for 7 people. Therefore, it is not a wise decision due to the additional payment that they need to pay.

8. Which cost will not be affected if a 7th girl was invited on the trip?

• 
  

• Condominium rental will not be affected since it is a fixed cost and because the condo can fit for a maximum of 7 people. Hence, you no need to rent a new room.

Glenda is planning a trip of 8 days to Florida. She has located a condominium and has put a deposit down on the unit. The rental company has a maximum occupancy for the condominium of 7 adults. There is an amusement park that she plans to visit. She is going to use her parents’ car, an SUV that can carry up to 6 people and their luggage. The SUV can travel an average of 9.4L/100km, the total distance is approximately 1,780 (travelling there plus driving around every day), and the average price of gas is $1.6 per litre. A season pass for an amusement park she wants to visit is $168 per person. Glenda estimates spending $40 per day per person for food. She estimates the costs for the trip as follows:

Condo Rental			$1,400
Gasoline			$270
Food (per person, per day)			$40
Amusement Park Season Pass (per person)			$168

(This one is the question)

 

No. of people incl. Glenda	Total Variable Cost	Average Variable Cost	Total Fixed Cost	Average Fixed Cost	Average Cost per Person
						1
2
3
4
5
6
7