Sally had an idea for a new business offering all-day tours of Melbourne city with lunch and refreshments included. Sally had estimated that her break-even point would be reached when she had taken 491 people on tours. After calculating break-even, the idea looked feasible so she commenced operating in mid-2021. At the end of her first year operating, Sally was confused by what the accounting information was showing in relation to break-even. She reached break-even point much earlier than estimated, therefore reported profits sooner than anticipated. She has put together some data in relation to this:

Required: (a) Provide three (3) reasons that might explain why Sally reached her break-even point earlier than expected.

(b) Sally had a maximum of four people take her city tour at a time during the year. She is considering advertising to attract more groups. What financial effects should Sally consider if the advertising is successful?

\begin{tabular}{|l|c|c|} \hline & Estimated & Actual \\ \hline Annual fixed costs (rent of city office space, website, insurance) & $28,000 & $22,000 \\ \hline Ticket price per person (flat rate per person, discount given for groups of ten or more) & $95 & $100 \\ \hline Variable costs per person (allows for food and drinks, public transport fares, wages for tour guide assistant) & $38 & $30 \\ \hline \end{tabular} \begin{tabular}{|l|c|c|} \hline & Estimated & Actual \\ \hline Annual fixed costs (rent of city office space, website, insurance) & $28,000 & $22,000 \\ \hline Ticket price per person (flat rate per person, discount given for groups of ten or more) & $95 & $100 \\ \hline Variable costs per person (allows for food and drinks, public transport fares, wages for tour guide assistant) & $38 & $30 \\ \hline \end{tabular}