The City of Winkelman has constructed a swimming pool in FY 2014 and you have been asked to calculate the user charge based on an estimate of 10,000 swimmers. Since the pool is inside a building it will remain open all year. Household income in Winkelman is $100,000.00 per year.

a. After you calculate the user fee, explain the impact of the fee on the population. Use the cost-volume-profit formula, the information in the directions, and the items listed below to construct your user charge.

Employee salaries, insurance, fringe benefits, equipment maintenance, and utilities are projected at $65,000.00.
The city received a one-time gift of $55,000.00 to subsidize the first year of operation.
Allocated fixed costs are projected at $25,000.00.

Variable costs are projected at $3.00 per swimmer.
Using the same figures estimate the user charge for the second year as well. However, assume that the number of swimmers increases by 2,000 and the local government will take $60,000.00 from the general fund to subsidize the pool. What can the government do to maintain the current user fee?

b. Using question 6a as a point of departure, the city has to determine how many additional life guards it needs to operate the pool during the summer when children are out of school. Due to the sheer volume of children and city codes, the city cannot ask the existing employees to work additional shifts. Hence, they are interested in hiring lifeguards for three of the shifts. Each lifeguard will work a four-hour shift seven days a week for the twelve-week period. They cannot work more than one shift per day. The new lifeguards will get three paid days off over the 12 week period. So, how many life guards are needed to provide 12 hours of additional coverage for the 84-day period? This problem can be completed in a word processing program.