Determine the breakeven number of visitors per year

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Two new rides are being compared by a local amusement park in terms of their annual operating costs. The two rides are assumed to be able to generate the same level of revenue (and thus the focus on costs). The Tummy Tugger has fixed costs of $10,000 per year and variable costs of $2.50 per visitor. The Head Buzzer has fixed costs of $4000 per year, and variable costs of $4 per visitor. Provide answers to the following questions so the amusement park can make the needed comparison. (a) Mathematically determine the breakeven number of visitors per year for the two rides to have equal annual costs. (b) Develop a graph that illustrates the following: (Note: Put visitors per year on the horizontal axis and costs on the vertical axis.)

•Accurate total cost lines for the two alternatives (show line, slopes, and equations).

•The breakeven point for the two rides in terms of number of visitors.

•The ranges of visitors per year where each alternative is preferred.

Reference no: EM13218611

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