ME
Muhammad Elsherbini
Answers (2)
ME
Answered
Which of the following is considered a selling point,not a benefit?
A) The most attractive features of the product
B) User experiences when purchasing the product
C) User gains from purchasing the product
D) Emotional response to purchasing the product
E) The practical use of the product
A) The most attractive features of the product
B) User experiences when purchasing the product
C) User gains from purchasing the product
D) Emotional response to purchasing the product
E) The practical use of the product
On Sep 27, 2024
A
ME
Answered
Lakeshore Tours Inc., operates a large number of 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 in order to improve the company's overall operating performance.One such tour is a two-day Battlefields of the French and Indian Wars bus tour.An income statement from one of these tours is given below: 
Dropping this tour would not affect the number of buses in the company's fleet or the number of bus drivers on the company's payroll.Buses do not wear out through use; rather, they eventually become obsolete.Bus drivers are paid fixed annual salaries; tour guides are paid for each tour conducted.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.There would be no change in the number of mechanics and other service personnel as a result of dropping this tour.The liability insurance depends upon the number of buses in the company's fleet and not upon how much they are used.
Required:
a.Prepare an analysis showing the financial advantage (disadvantage)if this tour is discontinued.
b.The company's tour director has been criticized because only about 50% of the seats on the company's tours are being filled as compared to an average of 60% for the industry.The tour director has explained that the company's average seat occupancy could be improved considerably by eliminating about 10% of the tours, but that doing so would reduce profits.Do you agree with the tour director's conclusion? Explain your response.
Dropping this tour would not affect the number of buses in the company's fleet or the number of bus drivers on the company's payroll.Buses do not wear out through use; rather, they eventually become obsolete.Bus drivers are paid fixed annual salaries; tour guides are paid for each tour conducted.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.There would be no change in the number of mechanics and other service personnel as a result of dropping this tour.The liability insurance depends upon the number of buses in the company's fleet and not upon how much they are used.Required:
a.Prepare an analysis showing the financial advantage (disadvantage)if this tour is discontinued.
b.The company's tour director has been criticized because only about 50% of the seats on the company's tours are being filled as compared to an average of 60% for the industry.The tour director has explained that the company's average seat occupancy could be improved considerably by eliminating about 10% of the tours, but that doing so would reduce profits.Do you agree with the tour director's conclusion? Explain your response.
On Sep 23, 2024
b.The elimination of tours with occupancy rates lower than the industry average would improve the overall average seat occupancy for the company as a whole.This action could reduce company profits in two ways.First, the tours that are eliminated could have a contribution margin that is higher than the avoidable costs of the tour itself.This is the case with the tour described in part 1 above.Eliminating these tours would reduce the company's total contribution margin more than it would reduce total costs resulting in a decline in profits.Second, these tours might be acting as "magnets' in that they may be drawing tourists to other, more profitable tours being offered by the company.