n$-$Class Problems $$ Chapter $3$

#$1$ Single Product CVP

Grand Canyon Adventures sells individual tickets for $$75$ for walking tours of the Grand

Canyon. Each ticket has variable costs $($including lunch$)$ of $$15$ per ticket. The company has

total fixed costs of $$200,000.$

Required:

a$.$ What is the CM per unit?

b$.$ How many tickets must be sold to breakeven?

c$.$ What level of revenue is needed to earn a target income of $$42,000?$

d$.$ If unit$-$level costs increase to $$20$ per ticket, what decrease in annual fixed costs must be

achieved to keep the same breakeven point as calculated in part b$?$

e$.$ Back to original assumptions: What is the CM ratio?

f$.$ Using the CM ratio, what level of revenue is needed to breakeven?

g$.$ Using the CM ratio, how many units of tickets must be sold to earn a target income of

$$60,000$

h$.$ How many tickets must be sold to earn after$-$tax income of $$120,000($with a tax rate of

$40\%)$