Question

You work for Gr8 Days Out, a company which provides single day coach trips to a variety of locations. The company offers an excursion for which fixed costs are £240. The coach seats 50 passengers. Each passenger is provided with a packed lunch costing £5 and an evening meal costing £12. A price of £25 is proposed for the trip. The company hopes to make a profit of £120 on each such excursion. Required: a) Calculate the number of passengers required to break-even at the proposed price, and the break-even revenue. (5 marks) b) Calculate the number of passengers required to achieve the target profit at the proposed price. (5 marks) c) Calculate the sales price required to achieve the target profit if 40 passengers register for the day trip. (5 marks) Market research carried out by the company indicates that at a price of £50 demand would be zero, but that for every £5 fall in price demand would increase by 10 passengers. Required: d) Calculate the price at which profit will be optimised, and identify the profit made at (10 marks) that price. e) Identify the profit or loss that would be made if passengers were to be charged £35, or if a price were to be charged to attract 50 passengers. (10 marks) Assume that one such excursion has attracted 40 expressions of interest at a price of £30 and that no bookings have yet been confirmed. The company are now approached by a hotel wishing to book seats for 20 passengers, and asking for a discount for each passenger. Required: f) Calculate the maximum discount the company should be prepared to offer from the current price of £30. (9 marks) g) Briefly explain THREE non-financial factors Gr8 Days Out should consider in deciding whether to offer a quotation for this special order. (6 marks)

          You work for Gr8 Days Out, a company which provides single day coach trips to a
variety of locations. The company offers an excursion for which fixed costs are £240.
The coach seats 50 passengers. Each passenger is provided with a packed lunch
costing £5 and an evening meal costing £12. A price of £25 is proposed for the trip.
The company hopes to make a profit of £120 on each such excursion.
Required:
a) Calculate the number of passengers required to break-even at the proposed
price, and the break-even revenue.
(5 marks)
b) Calculate the number of passengers required to achieve the target profit at the
proposed price.
(5 marks)
c) Calculate the sales price required to achieve the target profit if 40 passengers
register for the day trip.
(5 marks)
Market research carried out by the company indicates that at a price of £50 demand
would be zero, but that for every £5 fall in price demand would increase by 10
passengers.
Required:
d) Calculate the price at which profit will be optimised, and identify the profit made at
(10 marks)
that price.
e) Identify the profit or loss that would be made if passengers were to be charged
£35, or if a price were to be charged to attract 50 passengers. (10 marks)
Assume that one such excursion has attracted 40 expressions of interest at a price
of £30 and that no bookings have yet been confirmed. The company are now
approached by a hotel wishing to book seats for 20 passengers, and asking for a
discount for each passenger.
Required:
f) Calculate the maximum discount the company should be prepared to offer from
the current price of £30.
(9 marks)
g) Briefly explain THREE non-financial factors Gr8 Days Out should consider in
deciding whether to offer a quotation for this special order.
(6 marks)

You work for Gr8 Days Out, a company which provides single day coach trips to a
variety of locations. The company offers an excursion for which fixed costs are £240.
The coach seats 50 passengers. Each passenger is provided with a packed lunch
costing £5 and an evening meal costing £12. A price of £25 is proposed for the trip.
The company hopes to make a profit of £120 on each such excursion.
Required:
a) Calculate the number of passengers required to break-even at the proposed
price, and the break-even revenue.
(5 marks)
b) Calculate the number of passengers required to achieve the target profit at the
proposed price.
(5 marks)
c) Calculate the sales price required to achieve the target profit if 40 passengers
register for the day trip.
(5 marks)
Market research carried out by the company indicates that at a price of £50 demand
would be zero, but that for every £5 fall in price demand would increase by 10
passengers.
Required:
d) Calculate the price at which profit will be optimised, and identify the profit made at
(10 marks)
that price.
e) Identify the profit or loss that would be made if passengers were to be charged
£35, or if a price were to be charged to attract 50 passengers. (10 marks)
Assume that one such excursion has attracted 40 expressions of interest at a price
of £30 and that no bookings have yet been confirmed. The company are now
approached by a hotel wishing to book seats for 20 passengers, and asking for a
discount for each passenger.
Required:
f) Calculate the maximum discount the company should be prepared to offer from
the current price of £30.
(9 marks)
g) Briefly explain THREE non-financial factors Gr8 Days Out should consider in
deciding whether to offer a quotation for this special order.
(6 marks)

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