Harrison 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: 5 Click to view the operating income for each tour type.) The equipment has a zero disposal value. Guide wages, supplies, and vehicle fuel are variable costs with respect to the number of tours. Administrative salaries are fixed costs with respect to the number of tours. Alex Martin, Harrison 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 Required .X 1. If the Advanced tours are discontinued, one administrative position could be eliminated, saving the company $108,000. Assuming no change in the sales of Beginner tours, what effect would dropping the Advanced tour have on the company's operating income? 2. Refer back to the original data. If Harrison River Tours drops the Advanced tours, Martin estimates that sales of Beginner tours would increase by 50%. He believes that he could still eliminate the $108,000 administrative position. Equipment currently used for the Advanced tours would be used by the additional Beginner tours. Should Martin drop the Advanced tour? 3. What additional factors should Martin consider before dropping the Advanced tours? 0 Operating income for each tour Advanced Beginner 914,550 $ A 1,332,275 Revenues (1,005 x 5910; 805 x $1,655) Operating costs Administrative salaries Guide wages Supplies Depreciation of equipment Vehicle fuel Allocated corporate overhead Total operating costs Operating income (loss) 238,000 259,000 105,000 55,000 62,000 94.000 204,000 764,000 210,000 127,000 55,000 137,000 813,000 1,497,000 $ 101,550 $ (164,725)