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Adventure Expeditions offers guided back-country hiking tours. Adventure Expeditions provides a guide and all necessary food and equipment at a fee of $50 per person per day. Adventure Expeditions currently provides an average of 600 guide-days per month in June, July, August, and September. Based on available equipment and staff, maximum capacity is 800 guide-days per month. Monthly variable and fixed operating costs.

Variable costs per guide-day		Fixed costs per month
Food	$ 5	Equipment rental	$5,000
Guide Salary	25	Administration	5,000
Supplies	2	Advertising	2,000
Insurance	8
Total	$40	Total	$12,000

Determine the effect of each of the following situations on monthly profits. Each situation is to be evaluated independently of all others.

1. A $12 increase in the daily fee should result in a 150-unit decrease in monthly sales.
2. A $7 decrease in the daily fee should result in a 300-unit increase in monthly sales. However, because of capacity constraints, the last 100 guide-days would be provided by subcontracting to another firm at a cost of $46 per guide-day.
3. A tour agency has proposed to place a special, one-time order for 75 guide-days at a reduced fee of $45 per guide-day. The agency would pay all insurance costs. There would be additional fixed administration costs of $200.

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