Sahara Tours, Inc., organizes adventure tours for people interested in visiting a desert environment. A desert tour generally lasts three days. Sahara provides food, equipment, and guides. Larry Jobaria, the president of Sahara 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. Jobaria 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. Jobaria consider in developing a pricing strategy? 

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