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3 March, 16:10

Beball camp example covered in the class, let's assume the segment size is 9000, price per participant is $90, frequency is 1, variable cost per person is $5, TFC = $9,000. Based on the assumption provided above, what percentage of the segment should participate if the program wants to make $1500 profit?

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  1. 3 March, 16:23
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    About 1.37

    Explanation:

    Given that

    Segment size = 9000

    TFC = $9000

    VC per person = 5

    Price per person = 90

    Profit = 1500

    Let y he number of participants in the camp

    Thus,

    Variable cost = variable cost per person * no. Of participants

    VC = 5 * y

    VC = 5y

    Also,

    TC = TFC + TVC

    TC = 9000 + 5y

    The next thing to calculate for is total revenue

    Total revenue of the program = Price per person * No. of participants + Profit

    Total revenue of the program = 90 * y + 1,500

    Total revenue of the program = 90y + 1,500

    For break even

    TC = price per person * no. of participants

    9000 + 5y = 90y

    9000 = 90y - 5y

    9000 = 85y

    y = 9000/85

    y = 105.88

    y = 106 approximately.

    For $ 1,500 of profits:

    Number of participants at break-even + Profits/Price per participant

    106 + 1,500/90

    = 106 + 16.7 = 123

    = 123/1,500

    = 0.0137

    = 1.37% (Rounding to two decimal places)
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