Problem 1: (Pricing)

You are the Program Manager for a youth soccer program in Tucson, AZ. Looking at your organization you determine that your total fixed cost are $600,000, which includes facility maintenance, admin cost, and the personnel cost for those salaried staff members. In addition to these cost, you also have variable cost that total an additional $200,000. To date, your total hours of operation is 6,000 total hours. Knowing that your business is highly vulnerable to political and social conditions in Arizona, you operate with a 9% contingency rate. Calculate your total cost and your hourly item cost that you must charge (break-even point) both before and after contingency (round to answers to nearest cent).

Given that your programs are spread out throughout the city, with many located in under-resourced areas, you know that you much subsidize many of your programs to make them accessible to all youth. You have decided to subsidized programs in under-resourced communities at a 30% rate. This subsidy will be absorbed by programs in the more affluent communities. Calculate the subsidization rate for each community