Question
Caribbean Heritage Tours sells cultural package tours to Bahamas at a price of $30,000 per person. The variable costs per person are as follows ADMISSION
Caribbean Heritage Tours sells cultural package tours to Bahamas at a price of $30,000 per person. The variable costs per person are as follows
ADMISSION | 12,000 |
MEAL | 6,100 |
Ground transportation | 2,900 |
Insurance and other costs | 1,500 |
Total | 2,500 |
Annual fixed costs are $1,500,000
Required: Consider each situation independently. a) Calculate the revenue that Caribbean Heritage requires to break-even.
b) Calculate the number of persons that Caribbean Heritage requires to break-even
c) Compute the number of tours that must be sold if Caribbean heritage requires profit of $250,000. (State your answer to the nearest whole numbers)
d) Assuming a tax rate of 25%, what sales revenue would Caribbean Heritage need to earn an after-tax profit of $400,00?
e) Caribbean Heritage Tours is considering leasing its own bus. As a result. Fixed costs would increase by $150,000, but ground transportation costs would be reduced by 25%. If the bus is purchased, what would be the new break-even revenue? f) Caribbean Heritage Tours expects to sell 250 tours this year, what would be the net income?
g) If 250 tours are sold, calculate the margin of safety as a percentage of revenue
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