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 t…
| Ticket revenue (115 seat capacity × 40% occupancy × $80 ticket price per person) |
$ | 3,680 | 100 | % |
| Variable expenses ($11.00 per person) | 506 | 13.8 | ||
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| Contribution margin | 3,174 | 86.2 | % | |
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| Tour expenses: | ||||
| Tour promotion | $ | 670 | ||
| Salary of bus driver | 350 | |||
| Fee, tour guide | 730 | |||
| Fuel for bus | 185 | |||
| Depreciation of bus | 400 | |||
| Liability insurance, bus | 180 | |||
| Overnight parking fee, bus | 60 | |||
| Room and meals, bus driver and tour guide | 180 | |||
| Bus maintenance and preparation | 200 | |||
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| Total tour expenses | 2,955 | |||
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| Net operating loss | $ | (219) | ||