1. Merry, the Knight is a bookstore specializing in J. R. R. Tolkien and other fantasy literature. Recently, the bookstore has taken on a side business in New Zealand, package tours of the places where the filming for the movie trilogy took place. The first two years results follow, being a peak and lull year, and about the high and low ends of operating capacity: 2017 3500 $17,500,000 2018 4500 $ 22,500,000 Year Sales in units (tours) Sales Revenue ($5,000 per tour) Expenses Travel costs Meals and lodging Guide salaries, and expenses Insurance Advertising $ 2,950,000 5,250,000 4,950,000 1,500,000 2,000,000 $ 3,450,000 6,750,000 5,650,000 1,500,000 2,000,000 Net Operating Income $ 850,000 $ 3,150,000 The budget is being written up for the 2019 season, and the expected number of tours sold is 4200. In order to estimate net operating income for 2019, an analysis of the costs of doing business so far needs to be done. Assuming that the last two years costs can be used (they are typical), identify each of the company's expenses as either a pure variable, a mixed, or a fixed expense. Using the hi-lo method, separate each of the mixed expenses into fixed and variable elements. Redo the company's expense totals (for all the expenses separately) at the 4200 units sales level, and use it to estimate net operating income. Finally, a manager asked the accounting staff, at 6000 units sold, what would you estimate the total travel costs at? Respond appropriately