Really great job. Thank you so much. I really love it. Thank you so much for all of your help.
You work for Adelaide-based Tourperience Ltd which provide tourists and visitors with ‘experiences’ ofAdelaide and South Australia. Your manager is currently investigating introducing another product, which are ‘De-luxe’ helicopter rides over the Barossa Valley. Each trip would be 50km in total.
Your manager wants you to use cost-volume-profit analysis in order to help assess the plan’s feasibility. She provides you with the following estimated data:
Selling price per trip: $600 (total for 3 customers – trips only run with 3 customers)
Fuel: $50 per trip
Barossa ‘goodie bag’ per customer: $40
Helicopter rental per month: $20,000
Insurance per month (unlimited trips): $1,000
Pilot costs: $5,000 per month plus $100 per trip
Maintenance costs are difficult to estimate but data from a similar company in a different location shows that these monthly costs were $11,000 when 5,000 kms were flown and $5000 when 1,500 kms were flown.
REQUIRED: Calculate the following:
1) The Break-even point in trips per month (4 Marks)
2) The Break-even point in dollars of revenue per month (2 Marks)
3) Assuming a profit after tax requirement from the Helicopter trip business of $120,000 per year and a tax rate of 30%, calculate:
a) Trips required per month to obtain target profit (4 Marks)
b) Revenue required per month to obtain target profit (2 Marks)
Your manager has requested that the spreadsheet is easy to use for ‘What-if’ analysis – so she would like to be able to change some of the inputs to see the impact on the calculations above – for example, if the Helicopter were able to be rented more cheaply or the selling price was increased.
Hence 6 Marks are allocated to ease of use and accuracy for ‘what-if’ analysis (which will also depend on the formulas used)
2 marks are allocated for the general presentation of the spreadsheet.
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.
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
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
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
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
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