Question: Wildlife Escapes generates average revenue of $4,000 per person on its five-day tours of top wildlife parks in Kenya. The variable costs per person are:
|
Description
|
Amount
|
|
Airfare
|
$1,500
|
|
Hotel accommodations
|
1,000
|
|
Meals
|
300
|
|
Ground transportation
|
600
|
|
Park tickets and other costs
|
200
|
|
Total
|
$3,600
|
|
|
|
|
Annual fixed costs
|
$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 $100,000.
3. If fixed costs increased by $24,000, what decrease in variable cost per person must be achieved to maintain the breakeven point in requirement 1?