Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Lifetime Escapes generates average revenue of $7970 per person on its 7-day package tours to wildlife parks in Zimbabwe. The variable costs per person are
Lifetime Escapes generates average revenue of $7970 per person on its 7-day package tours to wildlife parks in Zimbabwe. The variable costs per person are as follows:
Airfare | $1600 |
Hotel accommodations | 3000 |
Meals | 500 |
Ground transportation | 400 |
Park tickets and other costs | 500 |
Total | $6000 |
Annual fixed costs total $400000.
Required:
- Calculate the number of package tours that must be sold to break even. (2 marks)
- Calculate the revenue needed to earn a target profit of $100000. (1 mark)
- If fixed costs increase by $19000, what decrease in variable cost per person must be achieved to maintain the break-even point calculated in requirement 1? (2 marks)
- The general manager at Lifetime Escapes proposes to increase the price of the package tour to $8500 to decrease the break-even point in units. Using information in the original problem, calculate the new break-even point in units. What factors should the general manager consider before deciding to increase the price of the package tour? (3marks)
question is correct could you please solve ASAP
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started