Chapter 3 Problem #3-38 Safari Escapes generates average revenue of $6,250 per person on its 5-day package tours to wildlife parks in Kenya. The variable costs per person are as follows:

Airfare $1,300

Hotel accommodations 2,450

Meals 900

Ground transportation 100

Park tickets and other costs 500

Total $5,250

Annual fixed costs total $590,000.

Calculate the number of package tours that must be sold to break even.

Calculate the revenue needed to earn a target operating income of $92,000.

If fixed costs increase by $29,500, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated in requirement 1?

The general manager at Safari Escapes proposes to increase the price of the package tour to $7,750 to decrease the breakeven point in units. Using information in the original problem, calculate the new breakeven point in units. What factors should the general manager consider before deciding to increase the price of the package tour?