Lifetime Escapes generates an average revenue of £6,000 per person on its five-day package tours to wildlife parks in Kenya. The variable costs per person are:
Air fare £ 1,300
Hotel accommodations 2,300
Meals 300
Ground transportation 400
Park tickets and other costs 800
Total £ 5,100
Annual fixed costs total £540,000.
Requirements
1. Calculate the number of package tours that must be sold to break even.
2. Calculate the revenue needed to earn a target operating income of £99,000.
3. If fixed costs increase by £33,000, what decrease in variable cost per person must be achieved to maintain the break even point calculated in requirement 1?