1234 5 Part 2 contains 3 Decision making recommendations that are independent of each other. Make sure you show your work or use cell referencing. Decision Making #1 Great Escapes offers guided hiking trips in Alaska. Great escapes provides a guide and all necessary food and equipment. 6 Currently the company provides an average of Maximum capacity is 7 8 The daily fee charged per hiker for this service: 9 650 number of hikers per month 800 number of hikers per month $60 per hiker 10 Variable costs per hiker: 11 Food 12 Guide cost 13 Supplies 14 Insurance 15 Total 16 17 Required: 5 24 223; 18 Determine the effect of each of the following situations on monthly profits. 19 You must use cell referencing to determine the effect of each situation. 20 21 #1 What is current monthly profit? 22 34 23 Each what-if situation is to be evaluated independently of all others. 24 #2 What if there is a 25 26 What would be the new monthly profit? 27 28 #3 What-if there is a 29 The last 30 31 What would be the new monthly profit? 32 33 #4 What-if a tour agency proposes a special one-time order of Fixed costs per Month: Equipment rental $ 4,500.00 Administration 2,000.00 Advertising 1,000.00 $ 7,500.00 $15 increase in the daily fee charged per hiker, which would result in a 150 decrease in the number of hikers per month $7 decrease in the daily fee charged per hiker, which would result in a 100 hikers would be provided services by subcontractor at a cost of 34 The insurance cost will not be incurred on these hikers, since the tour agency covers this cost. 300 increase in the number of hikers per month $65 per hiker 75 number of hikers at a reduced daily fee for these hikers $45 $250 35 There would be an additional fixed administration fee of 36 37 What would be the income from only the special order? 38 Should the company accept this one-time special order? Explain the costs that were relevant to the decision and also explain the costs that were irrelevant to the decision. Be specific on why certain costs were relevant and others were not relevant. The company should accept the special order, since it will increase income. The relevant costs were the food, guide cost, supplies, and the fixed administration fee of $250. 39 40 41 These costs are relevant, since the costs will occur based on the special order. The fixed costs per the month of equipment rental, administration, and advertising are irrelevant, since these costs will incur no matter the decision. The variable insurance cost is also irrelevant, since it will not be incurred in the special order. 42 43