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JulijaS [17]
3 years ago
8

Resling Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of

its 9 helicopters makes between 1,300 and 2,300 ​round-trips per year. The records indicate that a helicopter that has made 1,300 ​round-trips in the year incurs an average operating cost of ​$600 per​ round-trip, and one that has made 2,300 ​round-trips in the year incurs an average operating cost of ​$450 per​ round-trip.
Required:
1. Using the high-low method, estimate the linear relationship y =a + bX , where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK airport during the year.
2. Give examples of costs that would be included in a and in b.
3. If Reisen Travel expects each helicopter to make, on average, 1,200 round-trips in the coming year, what should its estimated operating budget for the helicopter fleet be?
Business
1 answer:
Reptile [31]3 years ago
3 0

Answer:

1.  y = $255 + $0.15 X

2. <u>Examples of costs that would be included in a and in b.</u>

a - Fixed Cost

Example : Maintenance Cost over the period

b - Variable Cost

Example : Maintenance Cost after every flight

3. $435

Explanation:

<u>linear relationship</u>

Fist determine the high point and the low point

High : 2,300 ​round-trips

Low  : 1,300 ​round-trips

Then determine the variable cost

<em>Variable Cost = Difference between Overheads ÷ Deference in Independent variables </em>

                       = ($600 - $450) ÷ (2,300 - 1,300)

                       = $0.15 per  round-trip

Determine the fixed cost element

<em>Fixed Cost = Total Overheads - Variable cost at a point</em>

Choosing the Highest point this will be :

Fixed Cost = $600 - $0.15 × 2,300

                  = $255

Then the  linear relationship y =a + bX will be  :   y = $255 + $0.15 X

<u>Examples of costs that would be included in a and in b.</u>

a - Fixed Cost

Maintenance Cost over the period

b - Variable Cost

Maintenance Cost after every flight

<u>Operating budget for the helicopter fleet with  1,200 round-trips in the coming year</u>

y = $255 + $0.15 X

   = $255 + $0.15 × (1,200)

   = $435

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3 years ago
The Pritzker Music Pavilion in downtown Chicago is a technologically sophisticated and uniquely designed performing arts venue t
jonny [76]

Answer:

a. What is the estimated contribution margin per ticket sold for the benefit concert?

contribution margin per ticket = ($15.50 + $2 + $17) - ($6 + $2.55 + $7) = $34.50 - $15.55 = $18.95

b. What are the estimated total fixed costs for the benefit concert?

total fixed costs = $21,000 + $85,000 = $106,000

c. What is the estimated profit from the benefit concert if 10,500 tickets are sold?

estimated profit = (10,500 x $18.95) - $106,000 = $92,975

d. How many tickets must be sold in order for concert profit to be $100,000?

number of tickets sold = ($106,000 + $100,000) / $18.95 = 10,870.71 ≈ 10,871 tickets sold

e. Assuming a tax rate of 31% on profits from the concert, what must dollar ticket sales be in order for after-tax concert profits to be $100,000?

$100,000 / (1 - 31%) = $144,927.54

number of tickets sold = ($106,000 + $144,927.54) / $18.95 = 13,241.56 ≈ 13,241.56 tickets sold

f. Assume that the organizers can negotiate the fixed payment for the pavilion's operating expenses. If the organizers expect to sell 10,500 tickets, how much can they afford to pay and still earn a profit of $100,000 (ignore taxes)?

contribution margin increases to $18.95 + $7 = $25.95

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$272,475 = $121,000 + ?

? = $151,475

you can pay up to $151,475 in fixed expenses to the pavilion

5 0
3 years ago
Cameron loves computer accessories, and he has a $40 gift card to Best Buy. He can spend his gift card to get either a new keybo
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Answer:

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Either to buy keyboard of $50

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To buy speakers costing $55

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3 years ago
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Read 2 more answers
You have the following information for Crane Company for the month ended October 31, 2022. Crane uses a periodic method for inve
Mazyrski [523]

Answer:

Crane Company

1. Weighted average cost per unit = $25.032

2.                                       (1) LIFO         (2) FIFO          (3) Average-cost

Ending inventory                $1,580          $1,940                  $1,752

Cost of goods sold               6,180           5,820                   6,008

Sales revenue                    $9,150         $9,150                  $9,150

Gross profit                          2,970           3,330                    3,142

Gross profit rate                  32.5%          36.4%                   34.3%

Explanation:

a) Data and Calculations:

Date       Description              Units    Unit Cost or Selling Price         Total

Oct. 1      Beginning inventory  50            $22                           $1,100

Oct. 9     Purchase                   110              24                            2,640

Oct. 11    Sale                           (90)                                   $35               $3,150

Oct. 17    Purchase                   90              26                            2,340

Oct. 22  Sale                           (50)                                     40                2,000

Oct. 25  Purchase                   60              28                             1,680

Oct. 29  Sale                         (100)                                     40                4,000

Total                     310 (240) = 70                                             $7,760 $9,150

Weighted average cost per unit = $25.032

LIFO:

Ending inventory

= (50 * $22) + (20 * $24)

= $1,100 + $480

= $1,580

Cost of goods sold = $7,760 - $1,580 = $6,180

FIFO:l

Ending inventory:

= (60 * $28)  + (10 * $26)                  

= $1,680 + $260 = $1,940

Cost of goods sold = $7,760 - $1,940 = $5,820

Weighted-average costs:

Ending inventory = 70 * $25.032 = $1,752

Cost of goods sold = $7,760 = $1,752 = $6,008

6 0
3 years ago
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