dropping a product line selling more tours nelson river tours a division of old world travel offers two types of guided fishing tours beginner and advanced operating income for each tour type in 2017 is as follows:

beginner advanced

revenue (1000*$900:800*$1650) $900000 $1320000

operating cost

administrative salaries 240000 200000

guide wages 260000 760000

supplies 100000 200000

depreciation of equipment 50000 120000

vehicle fuel 60000 48000

allocated corporate overhead 90000 132000

total operation costs 800000 1460000

operating income(loss) $100000 $(140000)

the equipment has a zero disposal value guide wages supplies and vehicle fuel are variable costs with respect to the number of tours . Dennies baldwin, nelson river tours president is concerned about the losses incurred on the advanced tours he is considering dropping the advanced tour and offering only the beginner tour

required

1- if the advanced tours are discontinued one administrative position could be eliminated saving the company $100000 assuming no change in the sales of beginner tours what effect would dropping the advanced tour have on the company operating income ?

2- refer back to the original data if nelson river tours drops the advanced tours baldwin estimates that sales of beginner tours would increase by 50% he believes that he could still eliminate the $100000 administrative position equipment currently used for the advanced tours would be used by the additional beginner tours should baldwin drop the advanced tour? explain

3- what additional factors should baldwin consider before dropping the advanced tours?