Seaside Cultural Tours offers guided tours of the major cities of South East Asia. Management is currently concerned about one of their services in particular. Tours of Bagan, Myanmar have recently reflected net losses. The following information relates to the costs involved with the Bagan tours:
Revenue: $1,500/tour (up to 4 people on the tour)
Direct Labor: 24 hours, @ $10/hour
Supplies (water, gas, food, etc.): $800/tour
Scheduling expenses (treated as variable overhead): $150/tour
Vehicle and equipment depreciation (allocation of a fixed cost): $350/tour
Average number of Bagan tours per month: 20
Management is considering discontinuing the Bagan part of their business.
By how much would monthly Operating Income increase or decrease if the Bagan segment were dropped?

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The Answer of Seaside Cultural Tours offers guided tours of the major cities of South East Asia. Management is currently concerned about one of their services in particular. Tours of Bagan, Myanmar have recently reflected net losses. The following information relates to the costs involved with the Bagan tours:
Revenue: $1,500/tour (up to 4 people on the tour)
Direct Labor: 24 hours, @ $10/hour
Supplies (water, gas, food, etc.): $800/tour
Scheduling expenses (treated as variable overhead): $150/tour
Vehicle and equipment depreciation (allocation of a fixed cost): $350/tour
Average number of Bagan tours per month: 20
Management is considering discontinuing the Bagan part of their business.
By how much would monthly Operating Income increase or decrease if the Bagan segment were dropped?

Seaside Cultural Tours Offers Guided Tours of the Major Cities