Nelson River Tours, a division of Old World Travel, of- fers two types of guided fishing tours, Beginner and Advanced. Operating income for each tour type in 2017 is as follows: Beginner $900,000 Advanced $1,320,000 Revenues (1,000 x $900; 800 x $1,650) Operating costs Administrative salaries 240,000 200,000 Guide wages Supplies Depreciation of equipment 260,000 760,000 200,000 100,000 50,000 120,000 48,000 132,000 1,460,000 Vehicle fuel 60,000 Allocated corporate overhead Total operating costs 90,000 800,000 S100,000 Operating income (loss) S (140,000) The equipment has a zero disposal value. Guide wages, supplies, and vehicle fuel are variable costs with respect to the number of tours. Administrative salaries are fixed costs with respect to the number of tours. Dennis Baldwin, Nelson River Tours' president, is concerned about the losses in- curred on the Advanced tours. He is considering dropping the Advanced tour and offering only the Beginner tour.

Nelson River Tours, a division of Old World Travel, of- fers two types of guided fishing tours, Beginner and Advanced. Operating income for each tour type in 2017 is as follows: Beginner $900,000 Advanced $1,320,000 Revenues (1,000 x $900; 800 x $1,650) Operating costs Administrative salaries 240,000 200,000 Guide wages Supplies Depreciation of equipment 260,000 760,000 200,000 100,000 50,000 120,000 48,000 132,000 1,460,000 Vehicle fuel 60,000 Allocated corporate overhead Total operating costs 90,000 800,000 S100,000 Operating income (loss) S (140,000) The equipment has a zero disposal value. Guide wages, supplies, and vehicle fuel are variable costs with respect to the number of tours. Administrative salaries are fixed costs with respect to the number of tours. Dennis Baldwin, Nelson River Tours' president, is concerned about the losses in- curred on the Advanced tours. He is considering dropping the Advanced tour and offering only the Beginner tour.

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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