Paige 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 follows: (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 fi costs with respect to the number of tours. Dave Martin, Paige 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 Requirement 1. If the Advanced tours are discontinued one administrative position could be eliminated, saving the company S106,000. Assuming no change in the sales of Beginner tours, what effect would dropping the Advanced tour have on the company's operating income? (Enterlouses in revenues as a negative amount. Enter a zero if the cost is not relevant. If the net effect is an operating 1058, enter the amount with parentheses.) Difference: Incremental (loss in revenues) and savings in costs from dropping Advanced tours Lost revenues from Advanced tours Avoidable operating costs from dropping Advanced tours: Administrative salaries Guide wages 768,000 Supplies Vehicle fuel Total avoidable costs Gainlons) in operating income from dropping Advanced tours Enter any number in the edit fields and then click Check Answer anced tours are discontinued one administrative position could be eliminated saving the companyi $106.000. Assuming 0 Operating income for each tour Advanced Beginner 933,800 $ $ 1,361,050 es 207.000 Revenues (1,015 x $920; 815 x $1,670) Operating costs Administrative salaries Guide wages Supplies Depreciation of equipment Vehicle fuel Allocated corporate overhead Total operating costs Operating income (loss) 238,000 264,000 102,500 57,000 65,000 95,000 821,500 768,000 205,000 127,000 52,000 131,000 gid the 1,490,000 (128,950) 112,300 $ ck And Requirement 2. Refer back to the original data. If Paige 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 $106.000 administrative position Equipment currently used for the Advanced tours would be used by the additional Beginner tours. Should Martin drop the Advanced tour? (Enter a zero if the cost is not relevant. If the net effect is an operating loss, enter the amount with parentheses. Enter losses in revenues and increases in costs as negative amounts.) Should Paige River Tours try to sell more Beginner tours? (Enter a positive amount only.) Paige will generate of incremental operating profit and therefore, should try to sell more Beginner tours. Requirement 3. What additional factors should Martin consider before dropping the Advanced tours? Select all of the correct statements A. Martin should consider if it is possible to increase the number of Advanced tours sold. B. Martin should investigate the possibility of increasing the price of the Advanced tours if customers would tolerate it. c. Martin should consider if it is possible to decrease the number of Advanced tours sold. D. Martin should see if it is possible to reduce the costs of Advanced tours before dropping them. BE None of the above are correct