Scribd Logo
Upload

Welcome to Scribd!

  • Problem 12-18 1. Blueline Tours, Inc. Analysis of Discontinuing Tour

    Uploaded by

    Jevin
    6 views2 pages
    BlueLine Tours is analyzing whether to discontinue one of its tours. If discontinued, the tour would avoid $1,650 in costs but lose a $2,100 contribution margin, resulting in a $450 decrease in profits. An alternative analysis shows keeping the tour would result in a $850 net operating loss while discontinuing it would save $1,300 in expenses but lose $2,100 in contribution margin, decreasing profits by $1,300.

    Original Description:

    Problem, with answer

    Original Title

    P12-20

    Copyright

    © © All Rights Reserved

    Available Formats

    XLS, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    BlueLine Tours is analyzing whether to discontinue one of its tours. If discontinued, the tour would avoid $1,650 in costs but lose a $2,100 contribution margin, resulting in a $450 decrease in profits. An alternative analysis shows keeping the tour would result in a $850 net operating loss while discontinuing it would save $1,300 in expenses but lose $2,100 in contribution margin, decreasing profits by $1,300.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    6 views2 pages

    Problem 12-18 1. Blueline Tours, Inc. Analysis of Discontinuing Tour

    Uploaded by

    Jevin
    BlueLine Tours is analyzing whether to discontinue one of its tours. If discontinued, the tour would avoid $1,650 in costs but lose a $2,100 contribution margin, resulting in a $450 decrease in profits. An alternative analysis shows keeping the tour would result in a $850 net operating loss while discontinuing it would save $1,300 in expenses but lose $2,100 in contribution margin, decreasing profits by $1,300.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Student Name: Jevin Yoder

    Class: Bus-212
    Problem 12-18
    1.
    BLUELINE TOURS, INC.
    Analysis of Discontinuing Tour
    Contribution margin lost if the tour is discontinued
    Less tour costs that can be avoided if the tour is discontinued:
    Tour promotion
    fee, tour guide
    fuel for bus
    overnight parking fee, bus
    room and meals, bus driver and tour guide
    Net decrease in profits if the tour is discontinued

    $
    $

    600
    700
    125
    50
    175

    (2,100)

    1,650
    $
    (450)
    Correct!

    BLUELINE TOURS, INC.


    Alternative Analysis of Discontinuing Tour

    Ticket revenue
    Less variable expenses
    Contribution margin
    Less tour expenses:
    Tour promotion
    Salary of bus driver
    Fee, tour guide
    Fuel for bus
    Depreciation of bus
    Liability insurance, bus
    Overnight parking fees, bus
    Room & meals, bus driver and tour guide
    Bus maintenance and preparation
    Total tour expenses
    Net operating loss

    $
    $
    $

    Keep
    the
    Tour
    3,000
    900
    2,100

    Drop
    the
    Tour
    $
    $

    600 $
    350
    700
    125
    450
    200
    50
    175
    300
    2,950
    (850) $

    Difference:
    Net
    Operating
    Income
    Increase or
    (Decrease)
    - $
    (3,000)
    900
    - $
    (2,100)

    - $
    350
    450
    200
    300
    1,300
    (1,300) $

    600
    700
    125
    50
    175
    1,650
    (450)
    Correct!

    Given Data P12-18:


    BLUELINE TOURS, INC.
    Seat capacity
    Occupancy
    Ticket price
    Ticket revenue
    Variable expenses
    Contribution margin
    Tour expenses:
    Tour promotion
    Salary of bus driver
    Fee, tour guide
    Fuel for bus
    Depreciation of bus
    Liability insurance, bus
    Overnight parking fee, bus
    Room and meals, bus driver and tour guide
    Bus maintenance and preparation
    Total tour expenses
    Net operating loss

    100
    40%
    75

    3,000
    900
    2,100

    600
    350
    700
    125
    450
    200
    50
    175
    300
    2,950
    (850)

    100.0%
    30.0%
    70.0%

    You might also like