End Trail Campground is open year-round. However, 80 percent of its revenues are generated from May through
Question:
End Trail Campground is open year-round. However, 80 percent of its revenues are generated from May through october. Since only 20 pereont of the revemues are generated from November to April, the campground is considering closing during those months. The yearly revenues and cost information expected by End Trail for next year if the campground does not close are:
Camping fees
$\$ 1,800,000$
Variable costs 990,000 Fixed costs $(\$ 40,000$ per month)
480,000 The cost to close the campground at the end of October would be $\$ 20,000$, and the cost to reopen in May would be $\$ 50,000$. If the campground is closed, the total fixed costs are only $\$ 25,000$ per month, rather than the $\$ 40,000$ per month when the campground is open.
Determine whether End Trail Campground should close from November to April or remain open for the entire year.
Step by Step Answer:
Survey Of Accounting
ISBN: 9780538846172
1st Edition
Authors: James D. Stice, W. Steve Albrecht, Earl Kay Stice, K. Fred Skousen