Harrison Hotels is considering adding a spa to its current facility in order to improve its list of amenities. Operating the spa would require a fixed cost of $21,630 a year. Variable cost is estimated at $36 per customer. The hotel wants to break even if 12,000 customers use the spa facility. What should be the price of the spa services?

$37.81

Explanation:

break even formula in units = total fixed costs / contribution margin

12,000 customers = $21,630 / contribution margin

contribution margin = $21,630 / 12,000 = $1.8025 ≈ $1.81 we must round up since one cent is the smallest value.

contribution margin = selling price - variable costs

$1.81 = selling price - $36

selling price = $36 + $1.81 = $37.81

If the hotel charges $37.81, the break even number will be 11,951 customers.

If the hotel charges $37.80, the break even number will be 12,017 customers.

i think it is sales-oriented, but i am not sure

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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