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Calculation of Impact on profit by selecting an option.
Sub: Accounts Topic: Service Sector Costing Question: Calculation of Impact on profit by selecting an option. ClassOf1 provides expert guidance to College, Graduate, and High school students on homework and assignment problems in Math, Sciences, Finance, Marketing, Statistics, Economics, Engineering, and many other subjects. Lakeshore Tours Inc., operates a large number of tours throughout the United States. A study has indicated that some of the tours are not profitable, and consideration is being given to dropping these tours in order to improve the company’s overall operating performance. One such tour is a two-day Battlefield of the French and Indian Wars bus tour. An income statement from one of these tours is given below: Ticket revenue (100 seats x 45% occupancy x $80 ticket price) $3,600 100% Less variable expenses ($24 per person) 1,080 30% Contribution margin 2,520 70% Less fixed tour expenses: Tour promotion $620 Salary of bus driver 400 Fee, tour guide 825 Fuel for bus 100 Depreciation of bus
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