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The Cabin Cruise Company (CCC) has a large parking lot that costs $20,000 per year to maintain. The City has offered $100,000 per year to
The Cabin Cruise Company (CCC) has a large parking lot that costs $20,000 per year to maintain. The City has offered $100,000 per year to rent the parking lot 50 hours each week during weekdays (7am to 5pm x 5 days per week). CCC could instead run the parking lot themselves during this time at an additional cost of $20,000 and generate $150,000 in revenues. Separately, a group of local restaurants has offered $10,000 per year to rent the parking lot for 42 hours each week for evenings (5pm to 11pm x 7 days per week). CCC could instead run the parking lot themselves during these times at a cost of $10,000 and generate $25,000 in revenues. The parking lot is always unused on Sundays. Recently, a driving school has offered to rent the parking lot on Sundays for up to $20 for 4-hours each Sunday as needed. This would likely generate $200 in annual revenues. Required: What is the best way to allocate the annual costs of $20,000 ? Show your calculations and provide a brief explanation as to which method was chosen (marks are based on the method chosen)
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