Answered: iable cost of $20 per member. Find the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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As the operator of XYZ Fitness gym, you calculate your demand equation to be x = -0 .0 6 p + 8 4 where x is the number of members in the club and p is the annual membership fee you charge per member. Your annual operating costs are a fixed cost of $20,000 per year plus a variable cost of $20 per member. Find the annual revenue function, in terms of p. Find the annual cost function, in terms of p Find a simplified expression for the annual profit function, in terms of p At what price should you set the annual membership fee to obtain the maximum revenue? What is the maximum possible revenue?

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