Blueline tours, inc., operates tours throughout the united states

P12-18 Blueline tours, Inc., operates 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 to improve the company’s overall operating performance.

 

One such tour is a two-day Historic Mansions bus tour conducted in the southern states. An income statement from typical Historic Mansions is listed below:

 

Ticket Revenue (100 seat capacity X 40% occupancy X
 

$75 ticket price per person) ………………………………… $3000 100%

Variable expenses ($22.50 per person) …………………………… 900 30

Contribution Margin ……………………………………………. 2100 70%

 

Tour expenses:

Tour promotion …………………………………………………… $ 600

Salary of bus driver ……………………………………………… 350

Fee tour guide …………………………………………………….. 700

Fuel for Bus …………………………………………………………. 125

Depreciation of bus …………………………………………….. 450

Liability insurance, bus ………………………………………… 200

Overnight parking fee, bus ………………………………….. 50

Room and meals, bus driver and tour guide ……….. 175

Bus maintenance and preparation ………………………. 300

Total tour expenses …………………………………………………………… 2950

 

Net operating expenses ……………………………………………………. $ (850)

 

The following additional information is available about the tour:

a. Bus drivers are paid fixed annual salaries; tour guides are paid for each tour conducted.

b. The “Bus maintenance and preparation” cost above is an allocation of the salaries of mechanics and other service personnel who are responsible for keeping the company’s fleet of buses in good operating condition.

c. Depreciation of buses is due to obsolescence. Depreciation due to wear and tear is negligible.

d. Liability insurance premiums are based on the number of buses in the company’s fleet.

e. Dropping the Historic Mansions bus tour would not allow Blueline Tours to reduce the number of buses in its fleet, the number of bus drivers on the payroll, or the size of the maintenance and preparation staff.

 

Required:

 

1. Prepare an analysis showing what the impact will be on the company’s profits if this tour is discontinued.

2. The company’s tour director has been criticized because only about 50% of the seats on Blueline’s tours are being filled as compared to an industry average seat occupancy could be improved considerably by eliminating about 10% of its tours, but that doing so would reduce profits. Explain how this could happen.

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more