Question
The State of Awesome has constructed a giant bounce house for adult use only to help relieve the stress of not being a kid anymore.
The State of Awesome has constructed a giant bounce house for adult use only to help relieve the stress of not being a kid anymore. As part of this initiative, you have been asked to calculate the user charge based on an estimate of 15,000 bouncers. Since the bounce house has been surrounded by a weather-proof pavilion, it will remain open 365 days a year. Use the cost-volume profit formula and the information provided below to construct your user charge. The following information is provided to aid in your calculation:
Household income in Awesome is $200,000 a year.
Employee (bounce technician) salaries, insurance, fringe benefits, equipment maintenance, and utilities are projected at $85,000.
The city received a one-time gift of $10,000 to subsidize the first year of operation.
Allocated fixed costs are projected at $25,000.
The sale of alcohol for use in the house is projected to earn $50,000 dollars a year.
Variable costs are projected at $2.50 a bouncer.
Bounce houses are awesome.
CVP equation is: P=VC + [(TFC + AFC) -S}/Q
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