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Algebra, STD1 EQ-Bank 23

Maya operates Sydney City Walking Tours, a city walking tour business.

The bus she hires holds up to 40 people. Each person on the tour pays $35 and receives a complimentary bottle of water.

Maya uses a spreadsheet to model the costs and revenue for each tour. 
  

  1. What are the total fixed costs for each tour?   (1 mark)

  2. How many people need to attend the tour for Maya to break-even?   (1 mark)

  3. Calculate the profit Maya makes if the tour is fully booked.   (2 marks)

Show Answers Only

a.    \($600\)

b.    \(20\ \text{people}\)

c.    \($600\)

Show Worked Solution

a.    \(\text{Total fixed costs}=$350+$250=$600\)
    

b.    \(\text{From the spreadsheet, Maya’s break-even is when }\)

\(\text{Total cost}=\text{Revenue}=$700\)

\(\therefore\ \text{People to break-even} = 20\)
  

c.    \(\text{Fully booked}=40\ \text{people}\)

\(\text{Variable cost} =40\times \$5= \$200\)

\(\text{Total costs} =$600+$200= \$800\)

\(\text{Revenue} =40\times \$35 = \$1400\)

\(\therefore\ \text{Profit} = \$1400-\$800 = \$600\)