Boards 4 Brides customizes standard board games to depict places and events for
ID: 2720060 • Letter: B
Question
Boards 4 Brides customizes standard board games to depict places and events for the happy couple. These are then provided to the guests at the wedding reception. Boards 4 Brides has the following historical information and is going to use the High – Low method to determine its pricing schedule.
Using the following data, determine what Boards 4 Brides must charge for a wedding with 500 guests in order to show a profit of $1,200.
# Persons $ Costs
200 $ 1700
700 $ 5200
380 $ 3040
900 $ 6850
425 $ 3500
Explanation / Answer
Variable cost per person = change in cost / (change in activity [At highest and lowest activity]
= (6850 -1700 ) / (900 -200)
= 5150 / 700
= $ 7.3571 per unit
Fixed cost at lowest activity = 1700 - (200 *7.3571)
= 1700 - 1471.42
= $ 228.58
Total cost for 500 guests = 500 *7.3571 + 228.58
= 3678.55 + 228.58
= $ 3907.13
Price = Total cost +profit
= 3907.13 + 1200
= $ 5107.13 (approx 5110 )