Hammerhead Charters Fishing Trips: How to Make a Profitable Business

How many trips must Hammerhead sell to break even?

a. 326 trips

How many trips must Hammerhead sell to earn a monthly operating profit of $17,500 after taxes?

b. 401 trips

Answer:

The number of trips Hammerhead must sell to break even is 326 trips.

The number of trips Hammerhead must sell to earn a monthly operating profit of $17,500 after taxes is approximately 401 trips.

Running a successful fishing trip business like Hammerhead Charters requires careful planning and financial analysis. To break even, a company must ensure that its total revenue covers all of its costs.

In the case of Hammerhead Charters, the total cost per trip is a combination of variable costs and fixed costs. Variable costs per trip are $25, while fixed costs add up to $13,650 per month. By calculating the total cost per trip, which includes both variable and fixed costs, Hammerhead can determine how many trips they need to sell to break even.

Considering the income tax rate of 20 percent, the company must also factor in after-tax profit when aiming for a specific monthly operating profit. By understanding their costs and desired profit margins, Hammerhead Charters can strategically price their fishing trips to achieve their financial goals.

With the right planning and marketing strategies, Hammerhead Charters can increase their trip sales and profitability, ensuring the success and sustainability of their fishing trip business.