This problem contains three parts. In Part A, you are asked to determine the parameters of the profit function - the contribution margin and the fixed costs. You should not move on to Parts B and C until you get Part A correct, or until you use up all of your tries. The correct profit function parameters will be given to you after you have completed Part A - you should use these parameters in Parts B and C. The problem is worth 20 points. Parts A and B are worth eight points each; Part C is worth four points. To get the eight points for Part A, you must answer both questions correctly; to get the eight points for Part B, you must answer all four questions correctly. You get six tries on Part A, eight on Part B, and four on Part C. ______________________________________________________ Charleston Carriage Company offers guided horse-drawn carriage rides through historic Charleston, South Carolina. The carriage business is highly regulated by the city. The fare for all passengers is $21.00. Charleston Carriage has the following monthly operating costs:

Fee paid to the city of Charleston	15% of ticket revenue
Cost of souvenir set of postcards given to each passenger	$0.40 per set
Monthly cost of leasing and boarding the horses	$44,000
Carriage drivers (tour guides) are paid on a per-passenger basis	$2.80 per passenger
Monthly payroll costs of non tour guide employees	$8,000
Marketing, web-site, telephone, and other monthly fixed costs	$7,500

In addition to these costs, Charleston Carriage pays a brokerage fee of $1.10 per ticket sold by brokers. On average, 60% of tickets are issued through these brokers; 40% are sold directly by Charleston Carriage. Charleston Carriage has several questions about its monthly revenues, costs, and profits in 2017.

REQUIRED [ROUND YOUR ANSWER TO PART A, QUESTION 1 TO THE NEAREST CENT; ROUND ALL OTHER ANSWERS TO THE NEAREST UNIT OR NEAREST DOLLAR.] Part A (6 tries; 8 points) 1. What is the estimated monthly contribution margin per passenger for Charleston Carriage in 2017? 2. What are the estimated total monthly fixed costs for Charleston Carriage in 2017?

Tries 0/6

Part B (8 tries; 8 points) 3. What is Charleston Carriage's estimated monthly operating income in 2017 if the number of monthly passengers is 8,600? 4. How many monthly passengers would be required for Charleston Carriage to break even in 2017? 5. How many monthly passengers would be required for Charleston Carriage to earn $110,000 per month in 2017? 6. Assuming a tax rate of 31%, what must revenue be in order for Charleston Carriage to earn $110,000 per month in 2017?

Tries 0/8

Part C (4 tries; 4 points) 7. Charleston Carriage has an opportunity to negotiate with the company that leases the horses and boards them. If Charleston Carriage expects to sell 5,253 tickets per month in 2017, what's the most it could pay to lease and board the horses if it wants to break even each month (ignoring taxes)?