Operating car wash at beach resort

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Reference no: EM131163865

Your family recently began operating a car wash at a beach resort. There are many other car washes at this beach resort. You have observed that the customers care only about finding the cheapest price for car washes; they do not care which company they use. Your family purchased the equipment and the building for the car wash. They were able to spend $1,000 of their savings to go towards this purchase. To cover the rest of this expense, they took out a small business loan. The cost of the loan comes to $15 per day for the next 3 years. The business must hire labor and purchase cleaning solutions, car wax, etc. to operate the car wash. After some research you have figured out that the cost for labor and supplies is as follows:

Number of car washes sold per day Total cost for labor and supplies

1 $10.67

2 $12.67

3 $16.00

4 $20.67

5 $26.67

6 $34.00

7 $42.67

8 $52.67

9 $64.00

10 $76.67

11 $90.67

12 $106.00

13 $122.67

14 $140.67

15 $160.00

16 $180.67

17 $202.67

18 $226.00

19 $250.67

20 $276.67.

When the beach resort is in-season, you have observed that you can charge a price of $14.00 per car wash. When the resort is off-season, the demand for car washes is much lower. You are only able to charge a price $4.67 per car wash. Right now the resort is in-season. Currently you are selling 17 car washes per day. Your family wants your advice. Prepare a ½-1 page report to help your family understand what they should do now and in the off-season. Use the report to help them understand why they should follow your advice.

Reference no: EM131163865

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