Gobi Tours, Inc., organizes adventure tours for people interested in visiting a desert environment. A desert tour generally lasts three days. Gobi provides food, equipment, and guides. Kaveh Cowart, the president of Gobi Tours, needs to set prices for the coming year. He has available the company€™s past cost data in the following table:

Required
Write a memo to Mr. Cowart explaining the potential advantages and disadvantages of using each of the different per-tourist cost figures as a basis for establishing a price to charge tourists during the coming year. What other factors must Mr. Cowart consider in developing a pricingstrategy?

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Span of Time Recent Tour $8,000 $250 One Year Ten Years Total cost of tours (a) Number of tourists (b) Cost per tourist (ab) $390,000 $2,700,000 12,000 S 260 225 32 1,500