Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

O ezto.mneducationConp Golden Tours, Inc., operates tours throughout the United States. A study has indicated that some of the ours are not profitable, and consideration

image text in transcribed
O ezto.mneducationConp Golden Tours, Inc., operates tours throughout the United States. A study has indicated that some of the ours are not profitable, and consideration is being given to dropping these tours to improve the company's overall operating performance. One such tour is a two-day Historic Mansions bus tour conducted in the southern states. An income statement from a typical Historic Mansions tour is given below Ticket revenue (110 seat capacity x 45% occupancy x$40 ticket price per person) Variable expenses ($12 per person) $1,980 594 100% 30% Contribution margin $1,386 70% Tour expenses: Tour promotion Salary of bus driver Fee, tour guide Fuel for bus Depreciation of bus Liability insurance, bus Ovemight parking fee, bus Room and meals, bus driver and tour guide Bus maintenance and preparation $ 350 200 390 100 180 120 80 100 110 Total tour expenses 1,630 Net operating loss S (244) The following additional information is available about the tour a. Bus drivers are paid fixed annual salaries; tour guides are paid for each tour conducted. n allocation of the salaries of mechanics and other company's fleet of buses in good operating service personnel who are responsible for keeping the condition c. Depreciation of buses is d. Liability insurance premiums are based on the number of buses in the company's fleet. due to obsolescence. Depreciation due to wear and tear is negligible n Tours to reduce the number of buses in eparation staff. its fleet, the number of bus drivers on the payroll, or the size of the maintenance and p Required: By how much will the profits increase or decrease if this tour is discontinued

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Oil And Gas Industry IRS Audit Technique Guide

Authors: Internal Revenue Service

1st Edition

1304113434, 978-1304113436

More Books

Students also viewed these Accounting questions

Question

how to write a c program that "plays ping pong"

Answered: 1 week ago