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Go Fox provides travel services on the Internet. 2011 was an important year for Go Fox as it reported positive operating income after 3 years
Go Fox provides travel services on the Internet. 2011 was an important year for Go Fox as it reported positive operating income after 3 years of operating losses. In the first quarter of 2010, Go Fox reported an operating loss of $7 million on sales revenue of $74 million. In the first quarter of 2011, sales revenue had more than doubled to $153 million, and Go Fox had operating income of $60 million. Assume that fixed costs were the same in 2011 as in 2010. Requirements 1. Compute the operating expenses for Go Fox in the first quarter of 2010 and in the first quarter of 2011. 2. Determine the cost function for Go Fox, that is, the total fixed cost and the variable cost as a percentage of sales revenue. 3. Explain how Go Fox's operating income could increase by $67 million with an increase in sales of $79 million, while it had an operating loss of $7 million on its $74 million of sales in the first quarter of 2010. . . . Requirement 1. Compute the operating expenses for Go Fox in the first quarter of 2010 and in the first quarter of 2011. 2010 2011 Sales revenue $ 74 million $ 153 million Less: Operating income (loss) () million 60 million $ 81 $ 93 Operating expenses million million Requirement 2. Determine the cost function for Go Fox, that is, the total fixed cost and the variable cost as a percentage of sales revenue. (Enter the total fixed cost in millions rounded to the nearest million, "X.X". Enter variable cost in decimal form to two decimal places, .XX.)
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