Question - Family escapes generates average revenue of $4,500 per person on its five day package tours to wildlife parks in Kenya. The variable costs per person are as follows.
Airfare= $,1400
Hotel accommodations= 1,000
Meals = 700
Ground Transportation = 100
Park tickets and other costs = 400
Total = $3,600
Annual fixed costs = $540,000
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 $90,000?
3. If fixed costs increase by 30,000 what decrease in variable cost per person must be achieved to maintain this breakeven point calculated in question 1.
4. The general manager at family escapes proposes to increase the price of the package tour to 7,600 to decrease the breakeven point. Using information in the original problems calculate the new breakeven point.