Desert Adventure Services (DAS) offers guided tours of the deserts of southern Arizona and California. Management is currently concerned about one of their services in particular. Tours of the Sonoran Desert near Tucson, AZ, have recently reflected net losses. The following information relates to the costs involved with the Sonoran tours:
Revenue: $1,000/tour (up to 6 people on the tour)
Direct Labor: 15 hours, @ $32/hour
Supplies (water, gas, food, etc.): $300/tour
Scheduling expenses (treated as variable overhead): $100/tour
Vehicle and equipment depreciation (allocation of a fixed cost): $150/tour
Average number of Sonoran tours per month: 15
Management is considering discontinuing the Sonoran part of their business.
By how much would monthly Operating Income increase or decrease if the Sonoran segment were dropped?

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The Answer of Desert Adventure Services (DAS) offers guided tours of the deserts of southern Arizona and California. Management is currently concerned about one of their services in particular. Tours of the Sonoran Desert near Tucson, AZ, have recently reflected net losses. The following information relates to the costs involved with the Sonoran tours:
Revenue: $1,000/tour (up to 6 people on the tour)
Direct Labor: 15 hours, @ $32/hour
Supplies (water, gas, food, etc.): $300/tour
Scheduling expenses (treated as variable overhead): $100/tour
Vehicle and equipment depreciation (allocation of a fixed cost): $150/tour
Average number of Sonoran tours per month: 15
Management is considering discontinuing the Sonoran part of their business.
By how much would monthly Operating Income increase or decrease if the Sonoran segment were dropped?

Desert Adventure Services (DAS) Offers Guided Tours of the Deserts