Required Information [The following information applies to the questions displayed below.] Spinnaker Museum of Salling (SMS) is a popular tourist site in a coastal town. The museum boasts a large collection of both current salling exhibits and historical displays focused on ocean exploration and maritime adventures. SMS, like many museums, is a not-for-profit organization, but it charges for admission and operates a highly-rated book shop on- site. The museum has several operating divisions. One of them, the Visitor Division, is responsible for activities related to visits from the public, such as collecting admission fees, providing coat and bag check service, operating the book store, and so on. The museum's financial director has provided the forecasted cost of the Visitor Division for the upcoming year, beginning July 1. SMS expects 250,000 visitors in the next fiscal year. Labor (variable) Miscellaneous (variable) Supervision (fixed) Miscellaneous (fixed) The average admission fee is $30 per visitor and the average visitor spends 2.5 hours in the museum. The museum director has received a proposal from Gitre Operations to provide staff and some other services for the Visitor Division. Gitre has proposed a fee of $15 per visitor. If SMS accepts the proposal from Gitre, SMS would avoid all labor cost and 60 percent of the variable miscellaneous costs. The museum would also save 70 percent of the supervision costs and 40 percent of the miscellaneous fixed costs. Required: 1. What are the costs of staffing Interally versus accepting the Gitre proposal? 2. Do you recommend that SMS accept the proposal from Gitre to provide staff and other services to the Visitor Division? >. The marketing director Informs the museum director that based on the latest economic conditions, the museum now is forecasting Only 150,000 visitors for the upcoming fiscal year. 1. What are the costs of staffing Interally versus accepting the Gitre proposal? 2. Do you recommend that SMS accept the proposal from Gitre to provide staff and other services to the Visitor Division? . At what forecasted attendance level will SMS be Indifferent between staffing the Visitor Division Internally and accepting the proposal from Gitre Operations? d. The museum director is confident that the museum will attract 250,000 visitors next year. The Board of Directors at SMS is encouraging the director to negotiate a lower fee with Gitre Operations. With 250,000 visitors, what fee would make SMS Indifferent between staffing the Visitor Division Internally and accepting the proposal from Gitre Operations? Labor $ 2,200,000 1,125,000 560,000 595,000 Complete this question by entering your answers in the tabs below. Req A1 Reg A2 Req B1 Req 82 Req C Req D What are the costs of staffing interally versus accepting the Gitre proposal? (Enter your answers in thousands. (i.e., 5,400,400 should be entered as 5,400.4).) Miscellaneous (variable) Supervision Miscellaneous (fixed) Gitre fee Total cost (All Costs in Thousands of Dollars) Accept Gitre Proposal Staff Internally $ 0 Difference

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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Required Information
[The following information applies to the questions displayed below.]
Spinnaker Museum of Salling (SMS) is a popular tourist site in a coastal town. The museum boasts a large collection of
both current sailing exhibits and historical displays focused on ocean exploration and maritime adventures. SMS, like
many museums, is a not-for-profit organization, but it charges for admission and operates a highly-rated book shop on-
site.
The museum has several operating divisions. One of them, the Visitor Division, is responsible for activities related to visits
from the public, such as collecting admission fees, providing coat and bag check service, operating the book store, and so
on. The museum's financial director has provided the forecasted cost of the Visitor Division for the upcoming year,
beginning July 1. SMS expects 250,000 visitors in the next fiscal year.
Labor (variable)
Miscellaneous (variable)
Supervision (fixed)
Miscellaneous (fixed)
The average admission fee is $30 per visitor and the average visitor spends 2.5 hours in the museum.
The museum director has received a proposal from Gitre Operations to provide staff and some other services for the
Visitor Division. Gitre has proposed a fee of $15 per visitor. If SMS accepts the proposal from Gitre, SMS would avoid all
labor cost and 60 percent of the variable miscellaneous costs. The museum would also save 70 percent of the supervision
costs and 40 percent of the miscellaneous fixed costs.
Required:
a1. What are the costs of staffing Interally versus accepting the Gitre proposal?
a2. Do you recommend that SMS accept the proposal from Gitre to provide staff and other services to the Visitor Division?
b. The marketing director Informs the museum director that based on the latest economic conditions, the museum now is forecasting
only 150,000 visitors for the upcoming fiscal year.
b1. What are the costs of staffing Interally versus accepting the Gitre proposal?
b2. Do you recommend that SMS accept the proposal from Gitre to provide staff and other services to the Visitor Division?
c. At what forecasted attendance level will SMS be Indifferent between staffing the Visitor Division Internally and accepting the
proposal from Gitre Operations?
Labor
d. The museum director is confident that the museum will attract 250,000 visitors next year. The Board of Directors at SMS Is
encouraging the director to negotiate a lower fee with Gitre Operations. With 250,000 visitors, what fee would make SMS Indifferent
between staffing the Visitor Division Internally and accepting the proposal from Gitre Operations?
Complete this question by entering your answers in the tabs below.
$ 2,200,000
1,125,000
Req A2
560,000
595,000
Req A1
Req B1
What are the costs of staffing interally versus accepting the Gitre proposal? (Enter your answers in thousands. (i.e.,
5,400,400 should be entered as 5,400.4).)
Miscellaneous (variable)
Supervision
Miscellaneous (fixed)
Gitre fee
Total cost
Req B2
Staff
Internally
$
Req C
(All Costs in Thousands of Dollars)
Accept Gitre
Proposal
Reg D
0
Difference
Transcribed Image Text:Required Information [The following information applies to the questions displayed below.] Spinnaker Museum of Salling (SMS) is a popular tourist site in a coastal town. The museum boasts a large collection of both current sailing exhibits and historical displays focused on ocean exploration and maritime adventures. SMS, like many museums, is a not-for-profit organization, but it charges for admission and operates a highly-rated book shop on- site. The museum has several operating divisions. One of them, the Visitor Division, is responsible for activities related to visits from the public, such as collecting admission fees, providing coat and bag check service, operating the book store, and so on. The museum's financial director has provided the forecasted cost of the Visitor Division for the upcoming year, beginning July 1. SMS expects 250,000 visitors in the next fiscal year. Labor (variable) Miscellaneous (variable) Supervision (fixed) Miscellaneous (fixed) The average admission fee is $30 per visitor and the average visitor spends 2.5 hours in the museum. The museum director has received a proposal from Gitre Operations to provide staff and some other services for the Visitor Division. Gitre has proposed a fee of $15 per visitor. If SMS accepts the proposal from Gitre, SMS would avoid all labor cost and 60 percent of the variable miscellaneous costs. The museum would also save 70 percent of the supervision costs and 40 percent of the miscellaneous fixed costs. Required: a1. What are the costs of staffing Interally versus accepting the Gitre proposal? a2. Do you recommend that SMS accept the proposal from Gitre to provide staff and other services to the Visitor Division? b. The marketing director Informs the museum director that based on the latest economic conditions, the museum now is forecasting only 150,000 visitors for the upcoming fiscal year. b1. What are the costs of staffing Interally versus accepting the Gitre proposal? b2. Do you recommend that SMS accept the proposal from Gitre to provide staff and other services to the Visitor Division? c. At what forecasted attendance level will SMS be Indifferent between staffing the Visitor Division Internally and accepting the proposal from Gitre Operations? Labor d. The museum director is confident that the museum will attract 250,000 visitors next year. The Board of Directors at SMS Is encouraging the director to negotiate a lower fee with Gitre Operations. With 250,000 visitors, what fee would make SMS Indifferent between staffing the Visitor Division Internally and accepting the proposal from Gitre Operations? Complete this question by entering your answers in the tabs below. $ 2,200,000 1,125,000 Req A2 560,000 595,000 Req A1 Req B1 What are the costs of staffing interally versus accepting the Gitre proposal? (Enter your answers in thousands. (i.e., 5,400,400 should be entered as 5,400.4).) Miscellaneous (variable) Supervision Miscellaneous (fixed) Gitre fee Total cost Req B2 Staff Internally $ Req C (All Costs in Thousands of Dollars) Accept Gitre Proposal Reg D 0 Difference
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