ACCM 4100: Management Accounting 1 - South Australia - Adelaide Based Tourperience Ltd Case study Assessment Answer

Subject Code: ACCM 4100

Adelaide Based Tourperience Ltd Case study Assessment Answer

Assignment Task: Learning Outcome 2: Formulate budgets and construct a cost-volume-profit analysis using practical scenarios Objective: The objective of this assignment is to effectively use spreadsheet software to provide cost-volume-profit analysis Required: The assignment will need to be submitted electronically on the portal, via the Moodle site. Please make sure you follow the guidelines noted in your subject outline especially those relating to the presentation of written work, late assignment policy and academic integrity. CASE STUDY USING EXCEL SPREADSHEET You work for Adelaide-based Tourperience Ltd which provide tourists and visitors with ‘experiences’ of Adelaide and South Australia. Your manager is currently investigating introducing another product, which is ‘De-luxe’ helicopter rides over the Barossa Valley. Each trip would be 50km in total. Your manager wants you to use cost-volume-profit analysis in order to help assess the plan’s feasibility. She provides you with the following estimated data: Selling price per trip: $600 (total for 3 customers – trips only run with 3 customers) Costs:

• Fuel: $50 per trip
• Barossa ‘goodie bag’ per customer: $40
• Helicopter rental per month: $20,000
• Insurance per month (unlimited trips): $1,000
• Pilot costs: $5,000 per month plus $100 per trip
• Maintenance costs are difficult to estimate but data from a similar company in a different location shows that these monthly costs were $11,000 when 5,000 km were flown and $5000 when 1,500 km were flown.

REQUIRED: Calculate the following: 1) The Break-even point in trips per month 2) The Break-even point in dollars of revenue per month 3) Assuming a profit after tax requirement from the Helicopter trip business of $120,000 per year and a tax rate of 30%, calculate: a) Trips required per month to obtain target profit b) The revenue required per month to obtain target profit Your manager has requested that the spreadsheet is easy to use for ‘What-if’ analysis – so she would like to be able to change some of the inputs to see the impact on the calculations above – for example, if the Helicopter were able to be rented more cheaply or the selling price was increased.

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