West Tours, Inc. organizes adventure tours for people interested in visiting a desert environment. A desert tour generally lasts three days. West provides food, equipment, and guides. Dan Silva, the president of West Tours, needs to set prices for the coming year. He has available the company's past cost data in the following table:

Required
Write a memo to Mr. Silva explaining the potential advantages and disadvantages of using each of the different per-tourist cost figures as a basis for establishing a price to charge tourists during the coming year. What other factors must Mr. Silva consider in developing a pricing strategy?

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Recent Tour $4,800 150 Span of Time One Year $234,000 $ 156 Ten Years Total cost of tours (a) Number of tourists (b) Cost per tourist (a + b) $1,620,000 12,000 32 1,500 $135