Crazy Coasters Amusement Park sells admission tickets for $ 70.00 per person for one visit. Variable costs are $ 15.00 per visitor and fixed costs are $ 3 comma 000 comma 000 per month. The company's relevant range extends to 230 comma 000 visitors per month. What is Crazy Coaster's projected operating income if 198 comma 000 visitors come to the park during the month?

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Business

Alanna Nicholson

27 June, 19:07

Crazy Coasters Amusement Park sells admission tickets for $ 70.00 per person for one visit. Variable costs are $ 15.00 per visitor and fixed costs are $ 3 comma 000 comma 000 per month. The company's relevant range extends to 230 comma 000 visitors per month. What is Crazy Coaster's projected operating income if 198 comma 000 visitors come to the park during the month?

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Sundance · Answer 1

The month operating income is projected to be $7,890,000

Explanation:

The computation of operating income for 198,000 visitors

Revenue ($70*198,000) $ 13,860,000.00

Variable costs ($15*198,000) ($2,970,000.00)

Contribution margin $ 10,890,000.00

Fixed costs ($3,000,000.00)

Projected operating income $7,890,000.00

The revenue is computed based on 198,000 visitors not on 230,000 visitors as it is expected that the number of visitors in the month would be 198,000

Overall Crazy Coasters Amusement Park would likely record an operating income of $7,890,000 during the month