Seventh Heaven takes tourists on helicopter tours of Hawaii. Each tourist buys a $150 ticket; the variable costs average $60 per person. Seventh Heaven has annual fixed costs of $702,000.
Required:
A. Compute the average number of tours the company must conduct per month to break even.
B. Compute the average sales revenue needed per month to produce a target average profit of $36,000 per month. See below (answer to "B").
C. Calculate the contribution margin ratio.
D. Determine whether the actions that follow will increase, decrease, or not affect the company's break-even point.
1. A decrease in tour prices.
2. The termination of a salaried clerk (no replacement is planned).
3. A decrease in the number of tours sold.

Question

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The Answer of Seventh Heaven takes tourists on helicopter tours of Hawaii. Each tourist buys a $150 ticket; the variable costs average $60 per person. Seventh Heaven has annual fixed costs of $702,000.
Required:
A. Compute the average number of tours the company must conduct per month to break even.
B. Compute the average sales revenue needed per month to produce a target average profit of $36,000 per month. See below (answer to "B").
C. Calculate the contribution margin ratio.
D. Determine whether the actions that follow will increase, decrease, or not affect the company's break-even point.
1. A decrease in tour prices.
2. The termination of a salaried clerk (no replacement is planned).
3. A decrease in the number of tours sold.

Seventh Heaven Takes Tourists on Helicopter Tours of Hawaii