1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
PolarNik [594]
3 years ago
10

Lifetime Escapes generates average revenue of $7,500 per person on its 5-day package tours to wildlife parks in Kenya. The varia

ble costs per person are as follows:
Airfair.............................$1,600

Hotel .............................$3,100

Meals.............................600

Transportation................300

Park tickets/other costs...700

Total...............................$6,300

A] Calculate the number of package tours that must be sold to break even.

B]Calculate the revenue needed to earn a target operating income of $102,000.

C] If fixed costs increase by $19,000, what decrease in variable cost er person must be achieved to maintain the breakeven point calculated in A.

D]The general manager of Lifetime Escapes proposes to increase the price of the package tour to $8,200 to decrease the breakeven point in units. Using information in the origional problem, calculate the new breakeven point in units. What factors should the general manager consider before deciding to increase the price of the package tour?
Business
1 answer:
Phantasy [73]3 years ago
4 0

Answer:

A) 475 units

B) $4,200,000

C) Variable cost per unit = $6,260

D) break-even = 300 packages

Explanation:

A) We know,

In a certain point, when a company does not get any profit but does not experience any loss, it is termed as break-even point.

The formula to calculate the break-even in units = \frac{Fixed Cost}{Selling price per unit - Variable cost per unit}

Given,

<em>Fixed cost</em> = $570,000

<em>Variable costs per unit</em> = (Air Fare + Hotel + Meals + Transportation + Park tickets) = $(1,600 + 3,100 + 600 + 300 + 700) = $6,300

<em>Selling price per unit</em> = $7,500

Putting the values into the formula,

Break-even per package = \frac{570,000}{7,500 - 6,300}

Break-even per package = 475 units

B) When a target profit is given, the formula to find the break-even is slightly different.

Break-even in units = \frac{Fixed Cost + Target profit}{Selling price per unit - Variable cost per unit}

From A, FC = $570,000; VC per unit = $6,300 and Selling price per unit = $7,500

And Target profit in question B = $102,000

Break-even per package = \frac{570,000 + 102,000}{7,500 - 6,300}

Break-even per package = 560

Break-even in dollars (revenues) = $7,500 × 560 = $4,200,000

C) If fixed costs increases by $19,000, the new fixed costs = $570,000 + 19,000 = $589,000.

According to the question, we have to keep the break-even point in 475 units by reducing the variable costs. Therefore, selling price per person will remain same.

Therefore, break-even per package = \frac{Fixed Cost}{Selling price per unit - Variable cost per unit}

475 packages = \frac{589,000}{7,500 - VC per unit}

or, 475 × ($7,500 - VC per unit) = $589,000

or, $3,562,500 - 475 VC per unit = $589,000

or, - 475 VC per unit = $589,000 - 3,562,500

or, - 475 VC per unit = -$2,973,500

or, Variable cost per unit = $2,973,500 ÷ 475 [multiplying both sides by -1]

or, Variable cost per unit = $6,260

D) As the general manager wants to increase the selling price to $8,200 from $7,500, the break-even package per person will reduce. The new break-even package per person will be as follow:

From A, FC = $570,000; VC = $6,300

Therefore, break-even per package = \frac{Fixed Cost}{Selling price per unit - Variable cost per unit}

Break-even per package = \frac{570,000}{8,200 - 6,300}

break-even per package = 300

Manager should consider one important thing. The first one is whether they can sell it more frequently than previous time. Therefore, if the manager wants to lower the break-even point, it will not make the best use of it.

You might be interested in
"GDP per capita" means that the GDP is calculated per
joja [24]

When GDP is said to be per capita, it means that GDP is being calculated <u>per person. </u>

<h3>What is GDP per capita?</h3>

This refers to the Gross Domestic Product of a nation being divided by the number of people in that nation.

This measure is used to show the productivity of the people in the nation such that a higher figure means that the citizens are more productive.

Find out more on GDP per capita at brainly.com/question/18414212.

#SPJ1

7 0
2 years ago
Before beginning to compose a successful business message, you need to collect necessary information by conducting informal or f
dybincka [34]

The questions should I  ask myself in order to avoid frustration and inaccurate messages are :

  • How should the receiver respond?
  • How should the receiver respond?
  • What details regarding this subject should the receiver be aware of?
<h2>How can I develop a company message that is effective?</h2>

You must first gather the relevant data by completing either formal or informal research before you can start to write a good business message. Frequently, the data you gather while conducting research aids in the development of your message.

<h2>Which of the following best sums up a message with a long-term impact?</h2>

A message that is highly complicated and has a long-term impact should be delivered verbally." Identify whether the claim is accurate or not. Despite the possibility that audiences will accept imprecise, vague, or conflicting business communications.

Learn more about effective company's message at :

brainly.com/question/14510443?referrer=searchResults

#SPJ4

5 0
2 years ago
In economics, what is meant by "optimal decisions are made at the margin?" The concept of the margin was initially developed in
Ivahew [28]

Answer:

The idea of the margin is related to making decisions while thinking about the benefits and costs of small changes in behavior.

Explanation:

Economic theory suggests that economic agents (firms, consumers and government) think on the sidelines. This means that decisions are made taking into consideration the benefits and costs of each choice. For example, for a firm to increase a unit of production (marginal unit) it will calculate the cost of production of that unit (marginal cost) and the profit that additional unit will generate (marginal benefit).

7 0
3 years ago
Assume that interest rate parity holds and that 90-day risk-free securities yield a nominal annual rate of 3% in the United Stat
xxTIMURxx [149]

Answer:

$1.55

Explanation:

Interest rate parity = (1+Rh) / (1+Rf) = F1 / S0

Rh = rate on home currency here US is home 3% p.a = 3%/4 = 0.75%

Rf= rate on foreign currency here Germany 3.5% p.a = 3.5%/4 = 0.875

F1 = Forward rate , S0= Spot market rate

So, (1+0.0075) / (1+0.00875) = F1 / 1.56

1.0075/1.00875 = F1 / 1.56

0.998761 = F1 / 1.56

F1 = 0.998761 * 1.56

F1 = 1.55806716

F1 = $1.55

Thus, the 90-day forward rate is $1.55

4 0
3 years ago
If Congress wanted to help the economy out of a recession, they would be most likely to: check all that apply Group of answer ch
s2008m [1.1K]

Answer:

increase transfer payments

decrease taxes

Explanation:

A recession is when the GDP  of a country for two consecutive quarters is negative

to help a country out of a recession, expansionary fiscal policies have to be undertaken

Expansionary fiscal policy is when the government increases the money supply in the economy either by increasing spending or cutting taxes.

increasing interest rate is a monetary policy

4 0
2 years ago
Other questions:
  • Tangerine Tangerine ink Target capital structure is 20% debtthe following information about sleep please Corporation a company h
    9·1 answer
  • Kubin company’s relevant range of production is 20,000 to 23,000 units. when it produces and sells 21,500 units, its average cos
    8·1 answer
  • Benefits of setting objectives for a company
    13·1 answer
  • In the Shaping Department of Oriole Company the unit materials cost is $4.00 and the unit conversion cost is $2.00. The departme
    9·1 answer
  • 1. Sid bought a new $1,500,000 seven-year class asset on August 2, 2020. On December 2, 2020, he purchased $900,000 of used five
    13·1 answer
  • The following information describes the production activities of Mercer Manufacturing for the yearActual direct materials used 3
    6·1 answer
  • When we watch a production of Hamlet, we know that the actors playing Gertrude and Hamlet will not actually die after being pois
    5·1 answer
  • 1. An open market purchase A. shifts the supply curve for reserves to the right and causes the federal funds rate to fall. B. sh
    12·1 answer
  • Sylvia wants to purchase a 2017 Dodge Challenger for a negotiated price of $38,770 inclusive of all costs (options, taxes, deliv
    14·1 answer
  • The double-declining-balance and straight-line depreciation methods: multiple choice are the only acceptable methods of deprecia
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!