House Corporation Board (HCB) of Tri-Gamma Sorority isresponsible for the operation of a two-story sorority house on theState University campus. HCB has set a normal capacity of 60 women.At any given point in time, there are 100 members of the chapter:60 living in the house and 40 living elsewhere (e.g., in thefreshman dorms on campus). HCB needs to set rates for the use ofthe house for the coming year. The following costs are budgeted:$240,000 fixed and $34,800 variable. The fixed costs are fairlyinsensitive to the number of women living in the house. Food isbudgeted at $40,000 and is included in the fixed costs; food doesnot seem to vary greatly given the stated capacity. The variableexpenses consist of telephone bills and some of the utilities. HCBis not responsible for chapter dues, party fees, pledging andinitiation fees, and other social expenditures. Women living in thehouse eat 20 meals per week there and live in a two-person room.(All in-house membersâ rooms, bathroom facilities, etc., are on thesecond floor.) All members eat Monday dinner at the house and havefull use of house facilities (e.g., the two TV lounges, kitchens,access to milk and cereal at any time, study facilities, and soon).
HCB has traditionally set two rates: one for in-house membersand one for out-of-house members. There are 32 weeks in a schoolyear.
Required:
Set charging rates for the in-house and out-of-house members.For interim computations, carry amounts out to the nearest cent.Round your final answers to the nearest dollar.
Charging rate In-house members $__________ per year Out-of-house members $__________ per year
House Corporation Board (HCB) of Tri-Gamma Sorority isresponsible for the operation of a two-story sorority house on theState University campus. HCB has set a normal capacity of 60 women.At any given point in time, there are 100 members of the chapter:60 living in the house and 40 living elsewhere (e.g., in thefreshman dorms on campus). HCB needs to set rates for the use ofthe house for the coming year. The following costs are budgeted:$240,000 fixed and $34,800 variable. The fixed costs are fairlyinsensitive to the number of women living in the house. Food isbudgeted at $40,000 and is included in the fixed costs; food doesnot seem to vary greatly given the stated capacity. The variableexpenses consist of telephone bills and some of the utilities. HCBis not responsible for chapter dues, party fees, pledging andinitiation fees, and other social expenditures. Women living in thehouse eat 20 meals per week there and live in a two-person room.(All in-house membersâ rooms, bathroom facilities, etc., are on thesecond floor.) All members eat Monday dinner at the house and havefull use of house facilities (e.g., the two TV lounges, kitchens,access to milk and cereal at any time, study facilities, and soon).
HCB has traditionally set two rates: one for in-house membersand one for out-of-house members. There are 32 weeks in a schoolyear.
Required:
Set charging rates for the in-house and out-of-house members.For interim computations, carry amounts out to the nearest cent.Round your final answers to the nearest dollar.
| Charging rate | |
| In-house members | $__________ per year |
| Out-of-house members | $__________ per year |
