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ASA Tours operates a network of offices around the globe specializing in local tours given by local residents and academics. Depending on the year, it operates at between 60 and 70 percent of capacity, which consists of locals who meet the criteria required by ASA. ASA operates three types of tours. Web-based tours consist of live-stream broadcasts with a limit of 15 participants. Group tours consist of small groups of no more than eight people. Finally, there are individual tours, which are personalized tours for no more than six people. Segmented income statements for a typical month appear as follows: Routes Sales. Variable costs Fixed costs allocated to tours Operating profit (loss) Web-Based $ 121,800 30, 600 42,396 $ 48,804 $ (30,292) ASA is considering dropping the group tours. If these tours are dropped, the revenue associated with the tours would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 35 percent. Required a 1 Required a 2 Required b Group $ 289,600 223,800 96,092 Required: a-1. Prepare a differential cost schedule. a-2. Should ASA Tours drop the group tours? b. Are there other factors you would recommend ASA Tours consider before making the decision? Revenue Less: Variable costs Contribution margin Individual $ 195,600 108,800 66,012 $ 20,788 Prepare a differential cost schedule. Note: Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect. Status Quo Alternative: Drop Group Tours Difference

ASA Tours operates a network of offices around the globe specializing in local tours given by local residents and academics. Depending on the year, it operates at between 60 and 70 percent of capacity, which consists of locals who meet the criteria required by ASA. ASA operates three types of tours. Web-based tours consist of live-stream broadcasts with a limit of 15 participants. Group tours consist of small groups of no more than eight people. Finally, there are individual tours, which are personalized tours for no more than six people. Segmented income statements for a typical month appear as follows: Routes Sales. Variable costs Fixed costs allocated to tours Operating profit (loss) Web-Based $ 121,800 30, 600 42,396 $ 48,804 $ (30,292) ASA is considering dropping the group tours. If these tours are dropped, the revenue associated with the tours would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 35 percent. Required a 1 Required a 2 Required b Group $ 289,600 223,800 96,092 Required: a-1. Prepare a differential cost schedule. a-2. Should ASA Tours drop the group tours? b. Are there other factors you would recommend ASA Tours consider before making the decision? Revenue Less: Variable costs Contribution margin Individual $ 195,600 108,800 66,012 $ 20,788 Prepare a differential cost schedule. Note: Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect. Status Quo Alternative: Drop Group Tours Difference

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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ASA Tours operates a network of offices around the globe specializing in local tours given by local residents and academics. Depending on the year, it operates at between 60 and 70 percent of capacity, which consists of locals who meet the criteria required by ASA. ASA operates three types of tours. Web-based tours consist of live-stream broadcasts with a limit of 15 participants. Group tours consist of small groups of no more than eight people. Finally, there are individual tours, which are personalized tours for no more than six people. Segmented income statements for a typical month appear as follows: Routes Sales Variable costs Fixed costs allocated to tours Operating profit (loss) Web-Based $ 121,800 30,699 42,396 $ 48,804 $ (30,292) Required a 1 Required a 2 ASA is considering dropping the group tours. If these tours are dropped, the revenue associated with the tours would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 35 percent. Group $ 289,600 223,800 96,992 Required: 0-1. Prepare a differential cost schedule. a-2. Should ASA Tours drop the group tours? b. Are there other factors you would recommend ASA Tours consider before making the decision? Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) Required b Individual $ 195,600 108,800 66,012 $ 20,788 Prepare a differential cost schedule. Note: Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect. Status Quo Alternative: Drop Group Tours Difference
Transcribed Image Text:ASA Tours operates a network of offices around the globe specializing in local tours given by local residents and academics. Depending on the year, it operates at between 60 and 70 percent of capacity, which consists of locals who meet the criteria required by ASA. ASA operates three types of tours. Web-based tours consist of live-stream broadcasts with a limit of 15 participants. Group tours consist of small groups of no more than eight people. Finally, there are individual tours, which are personalized tours for no more than six people. Segmented income statements for a typical month appear as follows: Routes Sales Variable costs Fixed costs allocated to tours Operating profit (loss) Web-Based $ 121,800 30,699 42,396 $ 48,804 $ (30,292) Required a 1 Required a 2 ASA is considering dropping the group tours. If these tours are dropped, the revenue associated with the tours would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 35 percent. Group $ 289,600 223,800 96,992 Required: 0-1. Prepare a differential cost schedule. a-2. Should ASA Tours drop the group tours? b. Are there other factors you would recommend ASA Tours consider before making the decision? Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating profit (loss) Required b Individual $ 195,600 108,800 66,012 $ 20,788 Prepare a differential cost schedule. Note: Select option "increase" or "decrease", keeping Status Quo as the base. Select "none" if there is no effect. Status Quo Alternative: Drop Group Tours Difference
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