Steve’s Helicopter Rides takes tourists on helicopter tours of Hawaii. The price of each ticket is...

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Steve’s Helicopter Rides takes tourists on helicopter tours of Hawaii. The price of each ticket is...

Steve’s Helicopter Rides takes tourists on helicopter tours of Hawaii. The price of each ticket is $150 and the variable costs average $60 per person. Steve’s monthly fixed costs are $58,500.

If annual sales increase by $100,000, by what amount will operating income increase?
If annual sales decrease by $50,000, by what amount will operating income decrease?

business accounting

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Answer 1

Answer #1

Contribution margin ratio = 150-60/150 = 60%

a) If annual Sales increase by $100000, operating income increase by (100000*60%) = 60000

b) If annual sales decrease by $50000 operating income decrease by (50000*60%) = -30000

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Answer 2

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