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What decrease in variable cost per person

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Question - Question 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 $1600

Hotel accommodations 3100

Meals 600

Ground transportation 300

Park tickets and other costs 700

Annual fixed costs total $570 000.

Total 6300

Required -

1. Calculate the number of package tours that must be sold to break even.

2. Calculate the revenue needed to earn a target profit 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 $8200 to decrease the break-even point in units. Using information in the original problem, calculate the new break-even point in units. What factors should the general manager consider before deciding to increase the price of the package tour?

Reference no: EM132565020

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