Situation: You are the director Blueline Tours, a company that operates tours throughout the United States. As a member of the senior leadership team, you have been asked to evaluate the following situations and provide a recommendation.

Blueline Tours, Inc. operates tours throughout the United States. A study has indicated that some of the tours are not profitable, and consideration is being given to dropping these tours to improve the companys overall operating performance.

One such tour is a two-day Historic Mansions bus tour conducted in the southern states. An income statement from a typical Historic Mansion tour is given below:

Ticket revenue (100 seat capacity X 40% occupancy X $75 ticket price per person)		$3,000	100%
Variable Expenses ($22.50 per person)		900	30%
Contribution Margin		2,100	70%
Tour Expenses:
Tour promotion	$600
Salary of bus drive	350
Fee, tour guide	700
Fuel for bus	125
Depreciation of bus	450
Liability insurance, bus	200
Overnight parking fee, bus	50
Room and meals, bus driver and tour guide	175
Bus maintenance and preparation	300
Total Expenses		2,950	98%
Net operating loss		$ (850)	- 28%

The following additional information is available about the tour:

• Bus drivers are paid fixed annual salaries; tour guides are paid for each tour conducted.
• The Bus maintenance and preparation cost above is an allocation of the salaries of mechanics and other service personnel who are responsible for keeping the companys fleet of buses in good operating condition.
• Depreciation of buses is due to obsolescence. Depreciation due to wear and tear is negligible.
• Liability insurance premiums are based on the number of buses in the companys fleet.
• Dropping the Historic Mansions bus tour would not allow Blueline Tours to reduce the numbers of buses in its fleet, the number of bus drivers on the payroll, or the sized of the maintenance and preparation staff.

1. Retain Tour or Drop Tour

1. Prepare an analysis showing what the impact will be on the companys profits if this tour is discontinued. Do you recommend dropping the tour? Explain.
2. The companys tour director has been criticized because only about 50% of the seats on all of Bluelines tours are being filled as compared to an industry average of 60%. The tour director has explained that Bluelines average seat occupancy could be improved considerably by eliminating about 10% of its tours, but that doing so would reduce profits. Explain how this could happen.

I need help with Cost volume profit questions under number 2

2. Cost Volume profit

The CEO would now like to know the following:

1. What is the break-even point for the Historic Mansions bus tour, in dollars and passengers, given the information provided above.
2. How many passengers are needed on an Historic Mansions bus tour to earn $1,000 of profit?
3. A group of 70 people is looking book a tour if they can get a group discount. What price per person do you recommend charging this group?

I need help setting up a flexible budget

3. Create a Flexible Budget

The CEO would like to see a flexible budget