Options:

* Fixed costs do not change

* Operating Income does not change

* Sales do not change

* Total costs do not change

* Variable costs do not change.

Priceline provides travel services on the Internet. 2011 was an important year for Priceline as it reported positive operating income after 3 years of operating losses. In the first quarter of 2010, Priceline reported an operating loss of $15 million on sales revenue of $62 million. In the first quarter of 2011, sales revenue had more than doubled to $129 million, and Priceline had operating income of $36 million. Assume that fixed costs were the same in 2011 as in 2010. Requirements 1. Compute the operating expenses for Priceline in the first quarter of 2010 and in the first quarter of 2011. 2. Determine the cost function for Priceline, that is, the total fixed cost and the variable cost as a percentage of sales revenue. 3. Explain how Priceline's operating income could increase by $51 million with an increase in sales of $67 million, while it had an operating loss of $15 million on its $62 million of sales in the first quarter of 2010. Requirement 1. Compute the operating expenses for Priceline in the first quarter of 2010 and in the first quarter of 2011. 2010 2011 Sales revenue 129 million Less: Operating income (loss) 36 62 million $ (15) million 77 $ million million 93 Operating expenses million Requirement 2. Determine the cost function for Priceline, 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, "XX". Enter variable cost in decimal form to two decimal places, XX.) Y = $ 62 0.24 Requirement 3. Explain how Priceline's operating income could increase by $51 million with an increase in sales of $67 million, while it had an operating loss of $15 million on its $62 million of sales in the first quarter of 2010. Because the increased sales in 2011 went directly to the entire in 2011 wiped out the The increased