Problem 2 Seventh Heaven takes tourists on helicopter tours of Hawaii. Each tourist buys a P150 ticket, the variable costs average P60 per person. Seventh Heaven has annual fixed costs of P702,000. Required: A. How many tours must the company conduct in a month to break even? B. Compute the sales revenue needed to produce a target net profit of S36,000 per month. C. Calculate the contribution margin ratio (in %). D Determine whether the actions that follow will increase, decrease, or not affect the company's break-even point. 1. A decrease in tour prices. 2 The termination of a salaried clerk (no replacement is planned). 3. A decrease in the number of tours sold.
Problem 2 Seventh Heaven takes tourists on helicopter tours of Hawaii. Each tourist buys a P150 ticket, the variable costs average P60 per person. Seventh Heaven has annual fixed costs of P702,000. Required: A. How many tours must the company conduct in a month to break even? B. Compute the sales revenue needed to produce a target net profit of S36,000 per month. C. Calculate the contribution margin ratio (in %). D Determine whether the actions that follow will increase, decrease, or not affect the company's break-even point. 1. A decrease in tour prices. 2 The termination of a salaried clerk (no replacement is planned). 3. A decrease in the number of tours sold.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 2
Seventh Heaven takes tourists on helicopter tours of Hawaii. Each tourist buys a P150 ticket, the variable costs average P60 per
person. Seventh Heaven has annual fixed costs of P702,000.
Required:
A. How many tours must the company conduct in a month to break even?
B. Compute the sales revenue needed to produce a target net profit of S36,000 per month.
C. Calculate the contribution margin ratio (in %).
D. Determine whether the actions that follow will increase, decrease, or not affect the company's break-even point.
1. A decrease in tour prices.
2 The termination of a salaried clerk (no replacement is planned).
3. A decrease in the number of tours sold.
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