Travel Packages Contribution Margin. Duncan Tours arranges and conducts travel tours for retirees in eastern Pennsylvania. Three basic tours are the most popular: New York City, Cape Cod, and Williamsburg. Prices and variable costs per person for each tour are:

The fixed costs, such as managers' and tour guides' salaries and office rent, have been estimated at \(\$ 800,000\) per year and are allocated to each tour based on the estimated number of customers served. A forecast income statement shows:

\section*{Required:}
1. Develop comparative income statements on a contribution margin basis for forecast and actual.
2. Explain the variation in contribution margin through variance analysis.
3. Comment on the major reasons for the change in net income for the year.

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Prices Variable Cost New York City. $400 $250 Cape Cod.. 350 175 Williamsburg. 540 360