Solution-Calculate revenue needed to earn a target

Calculate revenue needed to earn a target operating income

Reference no: EM13553677

CVP analysis, service firm Lifetime Escapes generates average revenue of $5,000 per person on its five-day package tours to wildlife parks in Kenya. The variable costs per person are as follows:

Airfare $1,400
Hotel accommodations 1,100
Meals 300
Ground transportation 100
Park tickets and other costs 800
Total $3,700
Annual fixed costs total $520,000.

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 $91,000.

3. If fixed costs increase by $32,000, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated in requirement 1?

Reference no: EM13553677

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Calculate revenue needed to earn a target operating income

Reference no: EM13553677

Reference no: EM13553677

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