Reference no: EM131820603

Problem - To play the pristine course and have access to its exclusive clubhouse, Running Rivers Golf Course requires a monthly membership. The company has begun preparation for the following year's budget and needs to determine how the club's costs behave in order to make accurate projections. The financial data for the first half of the current year is provided below.

Month	Number of Club Memberships	Total Operating Costs	Average Operating Costs per Club Member
January	100	$18,560	$185.60
February	120	$18,850	$157.08
March	150	$20,300	$135.33
April	225	$20,450	$90.89
May	240	$20,800	$86.67
June	220	$20,420	$92.82

Requirements:

1. Are Running Rivers' operating costs variable, fixed or mixed? Explain your reasoning.

2. Use the high-low method to determine the Running Rivers' monthly operating cost equation.

3. Predict the total monthly operating costs when Running Rivers reaches 375 members.

4. Can the total monthly operating costs be predicted if the Running Rivers reaches 1,000 members? Explain your answer.

5. Prepare the traditional income statement and the contribution margin income statement for Running Rivers Golf Course for the month of January. Assume that your cost equation from Requirement 2 accurately describes Running Rivers' cost behavior. Running Rivers charges members $225 per month for unlimited access to its golf course and clubhouse.