Camp Rainbow offers overnight summer camp programs for child

Camp Rainbow offers overnight summer camp programs for children ages 10-14 every summer during June and July. Each camp session is one week and can accommodate up to 200 children. The camp is not coed, so boys attend during the odd-numbered weeks and girls attend during the even-numbered weeks. While at the camp, participants make crafts participate in various sports, help care for the camp\'s resident animals, have cookouts and hayrides, and help assemble toys for local underprivileged children. The camp provides all food as well as materials for all craft classes and the toys to be assembled. One cabin can accommodate up to 10 children, and one camp counselor is assigned to each cabin. Three camp managers are on-site regardless of the number of campers enrolled. The results of the least-squares regression of the number of campers and the cost to run camp are given below Intercept Number of Campers Coefficients 1,986.48 63.66 Suppose that Rainbow is contemplating staying open one additional week during the summer Required 1. Using the results of the least-squares regression analysis, determine Rainbow\'s contribution margin per camper if each camper pays $164 to attend the camp for a week. (Round your unit contribution margin and contribution margin percentage ratio to two decimal places (i.e. .1234 should be entered as 12.34%.)) Unit Contribution Margin Contribution Margin Ratio 2. Using the results of the least-squares regression analysis, prepare a contribution margin income statement for week 9 assuming Rainbow expects to have 112 campers that week. (Round your intermediate calculations and final answer to 2 decimal places.) CAMP RAINBOW Contribution Margin Income Statement For Possible 9th Week Contribution Margin Net Operating Income 3. Should Rainbow add a ninth week to its schedule? Yes

Solution

Camp Rainbow 1) a) Unit contribution margin = Sales price – Variable cost per unit Unit contribution margin = $164 - $63.66 $100.34 Per Camper b) Contribution margin ratio = Unit contribution margin / Sales price Contribution margin ratio = $100.34/$164 61.18% 2) Camp Rainbow Contribution Margin Income Statement For Possible 9th Week Sales Revenue (112 x $164) $18,368.00 Less: Variable Costs (112 x $63.66) $7,129.92 Contribution Margin (112 x $100.34) $11,238.08 Less: Fixed Cost $1,986.48 Net operating Income $9,251.60 3) Yes, Rainbow should add the 9th week to its schedule because it will generate income for the camp.