EBK COST ACCOUNTING
15th Edition
ISBN: 9780133812763
Author: Rajan
Publisher: VST
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Textbook Question
Chapter 3, Problem 3.33P
CVP analysis, service firm. Lifetime Escapes generates average revenue of $7,500 per person on its 5-day package tours to wildlife parks in Kenya. The variable costs per person are as follows:
| Airfare | $1,600 |
| Hotel accommodations | 3,100 |
| Meals | 600 |
| Ground transportation | 300 |
| Park tickets and other costs | 700 |
| Total | $6,300 |
Annual fixed costs total $570,000.
- 1. Calculate the number of package tours that must be sold to break even.
Required
- 2. Calculate the revenue needed to earn a target operating income of $102,000.
- 3. If fixed costs increase by $19,000, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated in requirement 1?
- 4. The general manager at Lifetime Escapes proposes to increase the price of the package tour to $8,200 to decrease the breakeven point in units. Using information in the original problem, calculate the new breakeven point in units. What factors should the general manager consider before deciding to increase the price of the package tour?
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Students have asked these similar questions
Lifetime Escapes generates average revenue of $7,500 per person on its 5-day package tours to wildlife parks in Kenya. The variable costs per person are as follows:
Airfare $1,600
Hotel accommodations 3,100
Meals 600
Ground transportation 300
Park tickets and other costs 700
Total $6,300
Annual fixed costs total $570,000.
Q. Calculate the revenue needed to earn a target operating income of $102,000.
Calculate the number of package tours that must be sold to break even. If fixed costs increase by $19,000, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated?
3-38 CVP analysis, service firm. Lifetime Escapes generates average revenue of $7,500 per person on its5-day package tours to wildlife parks in Kenya. The variable costs per person are as follows:Airfare $1,600Hotel accommodations 3,100Meals 600Ground transportation 300Park tickets and other costs 700Total $6,300Annual fixed costs total $570,000.1. Calculate the number of package tours that must be sold to break even.2. Calculate the revenue needed to earn a target operating income of $102,000.3. If fixed costs increase by $19,000, what decrease in variable cost per person must be achieved to maintainthe breakeven point calculated in requirement 1?4. The general manager at Lifetime Escapes proposes to increase the price of the package tour to $8,200to decrease the breakeven point in units. Using information in the original problem, calculate thenew breakeven point in units. What factors should the general manager consider before deciding toincrease the price of the package tour?
Chapter 3 Solutions
EBK COST ACCOUNTING
Ch. 3 - Define costvolumeprofit analysis.Ch. 3 - Describe the assumptions underlying CVP analysis.Ch. 3 - Distinguish between operating income and net...Ch. 3 - Prob. 3.4QCh. 3 - Prob. 3.5QCh. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8QCh. 3 - Prob. 3.9QCh. 3 - Give an example of how a manager can decrease...
Ch. 3 - Give an example of how a manager can increase...Ch. 3 - What is operating leverage? How is knowing the...Ch. 3 - There is no such thing as a fixed cost. All costs...Ch. 3 - Prob. 3.14QCh. 3 - In CVP analysis, gross margin is a less-useful...Ch. 3 - Prob. 3.16ECh. 3 - Prob. 3.17ECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - CVP exercises. The Doral Company manufactures and...Ch. 3 - Prob. 3.21ECh. 3 - Prob. 3.22ECh. 3 - Prob. 3.23ECh. 3 - Prob. 3.24ECh. 3 - Prob. 3.25ECh. 3 - Prob. 3.26ECh. 3 - Sales mix, new and upgrade customers. Chartz 1-2-3...Ch. 3 - Prob. 3.28ECh. 3 - Prob. 3.29ECh. 3 - Prob. 3.30ECh. 3 - Prob. 3.31ECh. 3 - Prob. 3.32ECh. 3 - CVP analysis, service firm. Lifetime Escapes...Ch. 3 - Prob. 3.34PCh. 3 - Prob. 3.35PCh. 3 - Prob. 3.36PCh. 3 - Prob. 3.37PCh. 3 - CVP analysis, shoe stores. The HighStep Shoe...Ch. 3 - Prob. 3.39PCh. 3 - Prob. 3.40PCh. 3 - Prob. 3.41PCh. 3 - Prob. 3.42PCh. 3 - Prob. 3.43PCh. 3 - Prob. 3.44PCh. 3 - Prob. 3.45PCh. 3 - Sales mix, two products. The Stackpole Company...Ch. 3 - Prob. 3.47PCh. 3 - Prob. 3.48PCh. 3 - Deciding where to produce. (CMA, adapted) Portal...
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