Lifetime Escapes generates average revenue of $$5,600$ per person on its $5-$day package tours to wildlife parks in Kenya.

The variable costs per person are as follows:

$($Click on the icon to view the variable costs per person.$)$

Annual fixed costs total $$560,000.$

Read the requirements.

Requirement $4.$ The general manager at Lifetime Escapes proposes to increase the price of the package tour to $$6,200$ 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?

The number of tour packages that must be sold to break even is tour packages.

What factors should the general manager consider before deciding to increase the price of the package tour?

The key question for the general manager is:

A$.$ Can Lifetime Escapes sell enough packages at $$6,200$ per package to earn the same total operating income than when selling packages at $$5,600.$ Lowering the breakeven point in units is the objective.

B$.$ Can Lifetime Escapes increase the price of the package tour further to decrease the breakeven points to less than $280$ tour packages.

C$.$ Can Lifetime Escapes sell enough packages at $$6,200$ per package to earn more total operating income than when selling packages at $$5,600.$ Lowering the breakeven point in units is not the objective.

D$.$ Can Lifetime Escapes sell $280$ tour packages at $$6,200$ per package.