ABC Tours is organizing a 5 day trip to Toronto. For this particular five-day trip, it willcost the ABC Tours the following:$1,500/dayBus and driverMarketingMeals per person/day$5,00 (brochure and newspapers)$5.00 (4 breakfasts)$20.00 (5 dinners)$120.00 (4 nights)Hotel rooms (night)Events/attractions$25.00 (per event for a total of 7 events)$1,000Other fixed costsMiscellaneous variable costs$100 (per person)Price per client$1,700Travel guide$500/dayQuestionsWith the above information, calculate the following:1. Total fixed costs2. Variable costs (per client)3. Contribution margin (per client)4. PV ratio5. The number of clients needed to break-even6. The number of clients needed if Parkway wants to generate a $5,000 profit ABC Tours is organizing a 5 day trip to Toronto. For this particular five-day trip, it willcost the ABC Tours the following:$1,500/dayBus and driverMarketingMeals per person/day$5,00 (brochure and newspapers)$5.00 (4 breakfasts)$20.00 (5 dinners)$120.00 (4 nights)Hotel rooms (night)Events/attractions$25.00 (per event for a total of 7 events)$1,000Other fixed costsMiscellaneous variable costs$100 (per person)Price per client$1,700Travel guide$500/dayQuestionsWith the above information, calculate the following:1. Total fixed costs2. Variable costs (per client)3. Contribution margin (per client)4. PV ratio5. The number of clients needed to break-even6. The number of clients needed if Parkway wants to generate a $5,000 profit

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ABC Tours is organizing a 5 day trip to Toronto. For this particular five-day trip, it will cost the ABC Tours the following: Bus and driver $1,500/day Marketing Meals per person/day $5,00 (brochure and newspapers) $5.00 (4 breakfasts) $20.00 (5 dinners) $120.00 (4 nights) Hotel rooms (night) Events/attractions $25.00 (per event for a total of 7 events) $1,000 Other fixed costs Miscellaneous variable costs $100 (per person) Price per client $1,700 Travel guide $500/day Questions With the above information, calculate the following: 1. Total fixed costs 2. Variable costs (per client) 3. Contribution margin (per client)

ABC Tours is organizing a 5 day trip to Toronto. For this particular five-day trip, it will cost the ABC Tours the following: Bus and driver $1,500/day Marketing Meals per person/day $5,00 (brochure and newspapers) $5.00 (4 breakfasts) $20.00 (5 dinners) $120.00 (4 nights) Hotel rooms (night) Events/attractions $25.00 (per event for a total of 7 events) $1,000 Other fixed costs Miscellaneous variable costs $100 (per person) Price per client $1,700 Travel guide $500/day Questions With the above information, calculate the following: 1. Total fixed costs 2. Variable costs (per client) 3. Contribution margin (per client)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Cost-Volume-Profit Analysis

Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.

Marginal Costing

Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.

Question

ABC Tours is organizing a 5 day trip to Toronto. For this particular five-day trip, it will
cost the ABC Tours the following:
$1,500/day
Bus and driver
Marketing
Meals per person/day
$5,00 (brochure and newspapers)
$5.00 (4 breakfasts)
$20.00 (5 dinners)
$120.00 (4 nights)
Hotel rooms (night)
Events/attractions
$25.00 (per event for a total of 7 events)
$1,000
Other fixed costs
Miscellaneous variable costs
$100 (per person)
Price per client
$1,700
Travel guide
$500/day
Questions
With the above information, calculate the following:
1. Total fixed costs
2. Variable costs (per client)
3. Contribution margin (per client)
4. PV ratio
5. The number of clients needed to break-even
6. The number of clients needed if Parkway wants to generate a $5,000 profit

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ME EXERCISE 4: IDENTIFYING FIXED AND VARIABLE COSTS AND CALCULATING THE
CONTRIBUTION MARGIN AND THE PV RATIO
Parkway Travel Tours is organizing a five-day trip from Toronto to Branson, Missouri,
a family town with all types of attractions and theatres. Although it is a small town
(around 10,000 people), Branson attracts millions of visitors every year.
Branson hosts more than 100 live shows in 52 state-of-the art theatres. For this
particular five-day trip, it will cost the agency the following:
Buss and driver
Travel guide
Advertising
Meals per person/day
Hotel rooms (night)
Events/attractions
Other fixed costs
Miscellaneous variable costs
Price per
client
$2,500/day
$500/day
$1,000 (brochure and newspapers)
$5.00 (4 breakfasts)
$20.00 (5 dinners)
$60.00 (4 nights)
$40.00 (per event for a total of 7 events)
$1,000
$100 (per person)
$1,700
V3 Questions AD OMA RAJUDS
TAJUDJAD
With the above information, calculate the following:
1. Total fixed costs
2. Variable costs (per client)
3. Contribution margin (per client)
4. PV ratio
R3X3
5. The number of clients needed to break-even
6. The number of clients needed if Parkway wants to generate a
$5,000 profit
nint the cash break-even point, and the profit

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