Today is 10 January 2022 and you have received the following email from Miss Farra Amber.

From : Finance and Accounts Manager

Sent : 10 January 2022

Subject : Analysis on tour package Dear Management Accountant,

Thank you for the prompt reply in providing the performance report for 2021.

During the previous management meeting, the Sales and Marketing manager, Ms Emmy had highlighted that there has been a decreasing demand for certain tour packages for the past few years due to Covid-19 pandemic. The management team is now considering eliminating the tour package that appears to be unprofitable.

After careful analysis, I noticed that perhaps it will be feasible for the company to just focus on the private and solo tour instead of the group tour due to the net operating losses recorded. Kindly refer to the following Statement of Profit or Loss of tour package for the year 2021.

	Group Tour	Private Tour	Solo Tour	Total
Sales	50,000	125,000	75,000	250,000
Variable costs	30,000	50,000	25,000	105,000
Contribution margin	20,000	75,000	50,000	145,000
Fixed costs:
Salaries	8,000	29,500	12,500	50,000
Advertising	6,500	1,000	7,500	15,000
Utilities	1,000	500	500	2,000
Depreciation-office equipment	2,000	1,000	2,000	5,000
Depreciation-motor vehicle	4,000	10,000	6,000	20,000
Insurance	500	2,000	500	3,000
General administrative	6,000	15,000	9,000	30,000
	28,000	59,000	38,000	125,000
Net operating profit / (loss)	(8,000)	16,000	12,000	20,000

Based on the statement above and the information as per discussed by the management team with regards to dropping the said tour package, I will need your help to prepare a comparative Statement of Profit or Loss to show effect on companys profitability. Kindly comment based on your findings and please help to explain qualitative factors to be considered when deciding to eliminate the tour package.

Sincerely,

Miss Farra Amber

Finance and Account Manager

Required:

1. Prepare a comparative Statement of Profit or Loss to show the effect on the Marvel Getaways profitability if group tour is dropped.
2. Advise Marvel Getaways whether they should drop or continue the group tour.
3. Briefly explain TWO (2) qualitative factors to be considered when the company is considering dropping the tour package.