CVP analysis, service firm Wildlife Escapes generates average revenue of $4,000 per person on its five-day package tours to wildlife parks in Kenya. The variable costs per person are:
Annual fixed costs total $480,000.
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 $1 00,000.
3. If fixed costs increase by $24,000, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated in requirement1?