Part 1

Part 2, related

QUESTION 1 Philadelphia Swim Club is planning for the coming year. Investors would like to earn a 10% return on the company's $36,000,000 of assets. The company primarily incurs fixed costs to maintain the swimming pools. Fixed costs are projected to be $12,500,000 for the year. About 520,000 members are expected to swim each year. Variable costs are about $12 per swimmer. Philadelphia Swim Club is a price-taker and won't be able to charge more than its competitors who charge $40 for a membership. What profit will it earn in terms of dollars? O $(2,060,000) O $6,779,960 O $12,500,000 O $2,060,000 Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: Total Hiking| Fashion Sales revenue $480,000 $340,000 $140,000 Variable expenses $385,000 265,000 120,000 Contribution margin 95,000 75,000 20,000 Fixed expenses 77,000 38,500 38,500 Operating income (loss) $18,000 $36,500 $(18,500) Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Fashion line is used to increase the production of Hiking boots by 250%, how will operating income be affected? Increase $265,000 Increase $92,500 Increase $110,500 Decrease $92,500 OO