PROBLEM 4-5. Break-Even, "What If" [LO 2] Michael Bordellet is the owner/pilot of Bordellet Air Service. The company flies a daily round trip from Seattle's Lake Union to a resort in Canada. In 2016, the company reported an annual income before taxes of $120,403, although that included a deduction of $70,000, reflecting Michael's salary:

REQUIRED a. Use the high-low method to estimate fixed and variable costs. b. Based on these estimates, calculate the break-even level of sales in units. (Round to the nearest whole unit.) c. Calculate the margin of safety for the coming August assuming estimated sales of 175 units. d. Estimate total profit assuming production and sales of 175 units. e. Comment on the limitations of the high-low method in estimating costs for Lancer Audio. PROBLEM 4-4. Regression Analysis (see Appendix) [LO 1 and Appendix] Lancer Audio produces a high-end DVD player that sells for $1,300. Total operating expenses for the past 12 months are as follows: REQUIRED a. Use regression analysis to estimate fixed and variable costs. Round to two decimal places. b. Compare your estimates to those obtained using account analysis (Problem 4-2) and the highlow method (Problem 4-3). Which method provides the best estimates of fixed and variable costs? (Round all answers to the nearest dollar.) PROBLEM 4-5. Break-Even, "What If" [LO 2] Michael Bordellet is the owner/pilot of Bordellet Air Service. The company flies a daily round trip from Seattle's Lake Union to a resort in Canada. In 2016 , the company reported an annual income before taxes of $120,403, although that included a deduction of $70,000, reflecting Michael's salary: Revenue of $561,600 reflects six round trips per week for 52 weeks with an average of five passengers paying $360 each per round trip (6525$360=$561,600). The flight to the resort is 400 miles one way. With 312 round trips ( 6 per week 52 weeks), that amounts to 249,600 miles. The plane averages 7 miles per gallon. REQUIRED (Round all monetary calculations to the nearest cent and all trips to the nearest whole trip.) a. How many round trips is Michael currently flying, and how many round trips are needed to break even? b. How many round trips are needed so that Michael can draw a salary of $110,000 and still not show a loss? c. What is the average before-tax profit of a round trip flight in 2016 ? d. What is the incremental profit associated with adding a round-trip flight? PROBLEM 4-6. Account Analysis, High-Low, Contribution Margin [LO 1, 2] Information on occupancy and costs at the Light House Hotel for April, May, and June are indicated below: REQUIRED : fixed costs per month and the variable cost per occupied roo count il. Round to two decimal places. fixed costs per month and the variable cost per occupied room us. gh-low