Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Principles Volume 1

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

8th Canadian Edition

111950242X, 1-119-50242-5, 978-1119502425

More Books

Students also viewed these Accounting questions

Question

4. What means will you use to achieve these values?

Answered: 1 week ago