North Routes Tour is a division of Canadian Tours. North Routes Tour offers two types of guided fishing tours: Beginner and Advanced. Operating income for each tour type in 2019 is as follows: Revenues 1,010 x $915; 810 x $1,665 Operating Costs Administrative salaries Guide wages Supplies Depreciation of equipment Vehicle fuel Allocated corporate overhead Total operating costs Operating income (loss) Beginner $924,150 242,000 261,000 110,000 56,000 64,000 94,000 827,000 $97,150 Advanced $1,348,650 206,000 765,000 220,000 120,000 57,000 131,000 1,499,000 $(150,350) The equipment has a zero disposal value. Guide wages, supplies, and vehicle fuel are variable costs with respect to the number of tours. Administrative salaries are fixed costs with respect to the number of tours. The president of North Routes Tour is concerned about the losses incurred on the Advanced tours. He is considering dropping the Advanced tour and offering only the Beginner tour. Required Part A 1. If the Advanced tours are discontinued, one administrative position could be eliminated, saving the company $105,000. Assuming no change in the sales of Beginner tours, what effect would dropping the Advanced tour have on the company s operating income? Prepare an incremental analysis to determine the impact on operating income. 2. Based on your analysis conclude on whether the Advanced tours should be discontinued. Part B. 1. Refer back to the original data. If the Advance tours are dropped, it is estimated that the sales of the Beginner tours would increase by 50%. The president believes that the administrative position could still be eliminated, saving the company $105,000. Equipment currently used for the Advanced tours would be used by the additional Beginner tours. Should the Advanced tours be discontinued? Prepare a total analysis to determine the impact on operating income. 2. Based on your analysis conclude on whether the Advanced tours should be discontinued.