3-38. CVP ANALYSIS, SERVICE FIRM. Safari Escapes generates average revenue of $6,250 per person on its...

 

Transcribed Image Text:

3-38. CVP ANALYSIS, SERVICE FIRM. Safari Escapes generates average revenue of $6,250 per person on its 5-day package tours to wildlife parks in Kenya. The variable costs per person are as follows: Airfare Hotel accommodations Meals $1,300 2,450 900 Ground transportation 100 Park tickets and other costs 500 Total $5,250 Annual fixed costs total $590,000. Required 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 $92,000. 3. If fixed costs increase by $29,500, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated in requirement 1? 3-38. CVP ANALYSIS, SERVICE FIRM. Safari Escapes generates average revenue of $6,250 per person on its 5-day package tours to wildlife parks in Kenya. The variable costs per person are as follows: Airfare Hotel accommodations Meals $1,300 2,450 900 Ground transportation 100 Park tickets and other costs 500 Total $5,250 Annual fixed costs total $590,000. Required 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 $92,000. 3. If fixed costs increase by $29,500, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated in requirement 1?