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Prepare an Analysis showing what the impact will be on the company's profits if this tour is discontinued. Given Data P07-18: BLUELINE TOURS, INC. 100
Prepare an Analysis showing what the impact will be on the company's profits if this tour is discontinued.
Given Data P07-18: BLUELINE TOURS, INC. 100 Seat capacity Occupancy Ticket price 40% 75 $ $ 3,000 900 2,100 100.0% 30.0% 70.0% $ Ticket revenue Variable expenses Contribution margin Tour expenses: Tour promotion Salary of bus driver Fee, tour guide Fuel for bus Depreciation of bus Liability insurance, bus Overnight parking fee, bus Room and meals, bus driver and tour guide Bus maintenance and preparation Total tour expenses Net operating loss 600 350 700 125 450 200 50 175 300 2,950 (850) $ BLUELINE TOURS, INC. Alternative Analysis of Discontinuing Tour Difference: Net Operating Income Increase or (Decrease) Drop the Tour Keep the Tour 3,000 900 2,100 $ $ $ Ticket revenue Less variable expenses Contribution margin Less tour expenses: Tour promotion Salary of bus driver Fee, tour guide Fuel for bus Depreciation of bus Liability insurance, bus Overnight parking fees, bus Room & meals, bus driver and tour guide Bus maintenance and preparation Total tour expenses Net operating loss 600 350 700 125 450 200 50 175 300 2,950 (850) $Step by Step Solution
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