Cost Behavior and Cost-Volume-Profit Analysis for Many Glacier Hotel Using the High-Low Method to Estimate Variable and Fixed Costs Located on Swiftcurrent Lake in Glacier National Park, Many Glacier Hotel was built in 1915 by the Great Northern Railway. In an effort to supplement its lodging revenue, the hotel decided in 2001 to begin manufacturing and selling small wooden canoes decorated with symbols hand painted by Native Americans living near the park. Due to the great success of the canoes, the hotel began manufacturing and selling paddles as well in 2003. Many hotel guests purchase a canoe and paddles for use in self guided tours of Swiftcurrent Lake. Because production of the two products began in different years, the canoes and paddles are produced in separate production facilities and employ different laborers. Each canoe sells for $500, and each paddle sells for $50.A 2013 fire destroyed the hotel's accounting records. However, a new system put into place before the 2004 season provides the following aggregated data for the hotel's canoe and paddle manufacturing and marketing activities: Manufacturing Data: Total Canoe Manufacturing Total Paddle Manufacturing # of Canoes Manufactured 250 # of Paddles Manufactured Year Costs Year Costs 2009 2008 2007 2006 2005 2004 $103,000 128,000 108,000 114,000 142,500 140,000 38,500 49,000 275 008 2007 1,200 230 310 350 400 1,150 1,400 1,700 45,000 52,000 66,500 Marketing Data: Total Canoe Marketing Total Paddle Marketing #Of Canoes #Of Paddles Sold Year Sold Year 2009 2008 2007 2006 2005 2004 250 275 230 310 Costs 7,500 9,000 8,000 8,500 10,000 11,500 900 1,200 43,000 44,000 51,000 62,000 60,000 2008 2007 2006 1,150 400 5. Sensitivity Cost-Volume-Profit Analysis and Production vs Period Costs, Multiple- Product Setting If both the variable and fixed production costs (refer to your answer to Requirement 1) associated with the canoe product line increased by 5% (beyond the estimate from the high-low analysis), how many canoes and paddles would need to be sold in order to earn a target income of $96,000? Assume the same sales mix and additional fixed costs as in Requirement 3. 6. Margin of Safety Calculate the hotel's margin of safety (both in units and in sales dollars) for Many Glacier Hotel, assuming the same facts as in Requirement 3, and assuming that it sells 700 canoes and 2,500 paddles next year 3Break-even point in units for sales mi Total foed cost/weighted average contribution margin per unit otal foxed cost Canoe Paddies 7000 Total foxed cost 28250 Weighted average contribution margin per unit Canoe Paddles Sales price per 500 50 Less: Variable cost per unit 153 margin per Sales mix 300/1500)200/1500) 30.6 38.6 margin per Break-even point in units for sales mix 128250/38 6 3322 54 332 Seperation of break-even point based on sales mix Canoe. 332'20%.665 Units Paddies#332r80.t.2658 units ased on saies mit Cost Behavior and Cost-Volume-Profit Analysis for Many Glacier Hotel Using the High-Low Method to Estimate Variable and Fixed Costs Located on Swiftcurrent Lake in Glacier National Park, Many Glacier Hotel was built in 1915 by the Great Northern Railway. In an effort to supplement its lodging revenue, the hotel decided in 2001 to begin manufacturing and selling small wooden canoes decorated with symbols hand painted by Native Americans living near the park. Due to the great success of the canoes, the hotel began manufacturing and selling paddles as well in 2003. Many hotel guests purchase a canoe and paddles for use in self guided tours of Swiftcurrent Lake. Because production of the two products began in different years, the canoes and paddles are produced in separate production facilities and employ different laborers. Each canoe sells for $500, and each paddle sells for $50.A 2013 fire destroyed the hotel's accounting records. However, a new system put into place before the 2004 season provides the following aggregated data for the hotel's canoe and paddle manufacturing and marketing activities: Manufacturing Data: Total Canoe Manufacturing Total Paddle Manufacturing # of Canoes Manufactured 250 # of Paddles Manufactured Year Costs Year Costs 2009 2008 2007 2006 2005 2004 $103,000 128,000 108,000 114,000 142,500 140,000 38,500 49,000 275 008 2007 1,200 230 310 350 400 1,150 1,400 1,700 45,000 52,000 66,500 Marketing Data: Total Canoe Marketing Total Paddle Marketing #Of Canoes #Of Paddles Sold Year Sold Year 2009 2008 2007 2006 2005 2004 250 275 230 310 Costs 7,500 9,000 8,000 8,500 10,000 11,500 900 1,200 43,000 44,000 51,000 62,000 60,000 2008 2007 2006 1,150 400 5. Sensitivity Cost-Volume-Profit Analysis and Production vs Period Costs, Multiple- Product Setting If both the variable and fixed production costs (refer to your answer to Requirement 1) associated with the canoe product line increased by 5% (beyond the estimate from the high-low analysis), how many canoes and paddles would need to be sold in order to earn a target income of $96,000? Assume the same sales mix and additional fixed costs as in Requirement 3. 6. Margin of Safety Calculate the hotel's margin of safety (both in units and in sales dollars) for Many Glacier Hotel, assuming the same facts as in Requirement 3, and assuming that it sells 700 canoes and 2,500 paddles next year 3Break-even point in units for sales mi Total foed cost/weighted average contribution margin per unit otal foxed cost Canoe Paddies 7000 Total foxed cost 28250 Weighted average contribution margin per unit Canoe Paddles Sales price per 500 50 Less: Variable cost per unit 153 margin per Sales mix 300/1500)200/1500) 30.6 38.6 margin per Break-even point in units for sales mix 128250/38 6 3322 54 332 Seperation of break-even point based on sales mix Canoe. 332'20%.665 Units Paddies#332r80.t.2658 units ased on saies mit