Question

cholastic Tours is trying to decide which one of two tours it will introduce. The costs and revenues associated with each alternative are listed below: Eastern Tour Western Tour Projected revenue $ 11,000 $ 13,000 Variable costs 2,000 6,000 Fixed costs 3,000 3,000 Profit $ 6,000 $ 4,000 What are the incremental (differential) costs of the Western Tour

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Eastern Tour Western Tour

Projected revenue $ 11,000 $ 13,000

Variable costs 2,000 6,000

Fixed costs 3,000 3,000

Profit $ 6,000 $ 4,000

Western Tour provides a higher projected revenue ($2,000 higher), but also higher variable costs. The variable cost of Eastern Tour is $4,000 lower, making it the more profitable option, as fixed costs are equal.