Shea River Tours, a division of Old World Travel, offers two types of guided fishing tours: Beginner and Advanced. Operating income for each tour type for the year is as 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 tourr. Administrative salaries are fixed costs with respect to the number of tours. Mike Ballard, Shea River Tours' president, is concerned about the losses incurred on the Advanced tours. He is consiuering dropping the Advanced tour and offering only the Beginner tour. Operating income for each tour Required 1. If the Advanced tours are discontinued, one administrative position could be eliminated, saving the company $109,000. Assuming no change in the sales of Beginner tours, what effect would dropping the Advanced tour have on the company's operating income? 2. Refer to the original data. If Shea River Tours drops the Advanced tours, Ballard estimates that sales of Beginner tours would increase by 50%. He believes that he could still eliminate the $109,000 administrative position. Equipment currently used for the Advanced tours would be used by the additional Beginner tours. Should Ballard drop the Advanced tour? Explain. 3. What additional factors should Ballard consider before dropping the Advanced tours? On the basis of financial considerations alarne, should Shea River Tours discontinue the Advanced tours, assuming one administrative position could be eliminated, saving the company $109,000? 'Enter a positive amount only.) Shea's operating profit will be \$ if it discontinues the Advanced tours. Therefore, Shea discontinue the Advanced tours. Requirement 2. Refer to the original data. If Shea River Tours drops the Advanced tours, Ballard estimates that sales of Beginner tours would increase by 50%. He believes that he could still eliminate the $109,000 administrative position. Equipment currently used for the Advanced tours would be used by the additional Beginner tours. Should Ballard drop the Advanced tour? Explain. (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.) Requirement 3. What additional factors should Ballard consider before dropping the Advanced tours? (Select all that apply.) A. Ballard should see if it is possible to reduce the costs of Advanced tours before dropping them. B. Ballard should consider if it is possible to increase the number of Advanced tours sold. C. Ballard should consider if it is possible to decrease the number of Advanced tours sold. D. Ballard should investigate the possibility of increasing the price of the Advanced tours if customers would tolerate it. E. None of the above are correct