{"id":15079,"date":"2022-11-25T18:26:07","date_gmt":"2022-11-25T18:26:07","guid":{"rendered":"https:\/\/highclasswriters.com\/blog\/?p=15079"},"modified":"2022-11-25T18:26:08","modified_gmt":"2022-11-25T18:26:08","slug":"cost-analysis-for-parasailing-company","status":"publish","type":"post","link":"https:\/\/highclasswriters.com\/blog\/cost-analysis-for-parasailing-company\/","title":{"rendered":"<br>Cost Analysis for Parasailing Company"},"content":{"rendered":"\n<p>In this paper, please discuss the following case study.<\/p>\n\n\n\n<p>In doing so, explain your approach to the problem, support your approach with references, and execute your approach. Provide an answer to the case study\u2019s question with a recommendation.<\/p>\n\n\n\n<p><em><strong>Case Study:<\/strong><\/em><\/p>\n\n\n\n<p><em><strong>You are the owner of a parasailing company that is expanding operations to a new beachfront location, and you need to prepare a 3-year analysis for the bank that may loan you the funds to purchase your boat and parasailing equipment.&nbsp;A lot of business is done on a referral basis, where a company pays a fee to a 3rd party to send them customers.&nbsp;However,&nbsp;because of your well-established reputation, you already have received requests for \u201cflights\u201d to be scheduled as soon as you open the new location. Therefore, you expect to break-even the first year but must calculate the number of flights needed. You also need to determine the new break-even point in Year 2 if the location allows referrals, which you believe will&nbsp;cost on&nbsp;average about 2% of the sales price overall. Finally, you need to determine the volume needed to have $10,000 in profit in Year 3.<\/strong><\/em><\/p>\n\n\n\n<p>The following information is available:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Sales price per flight $175<\/li>\n\n\n\n<li>Estimated loan payment per month $350<\/li>\n\n\n\n<li>Fuel costs per flight $100<\/li>\n\n\n\n<li>Full-time scheduler salary $2,500 per month<\/li>\n\n\n\n<li>Boat crew per flight $30<\/li>\n\n\n\n<li>$500 per month dock fee and use of a small office on a pier<\/li>\n<\/ul>\n\n\n\n<p>Requirements:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Calculate the Year 1 break-even quantity, contribution margin, and contribution margin ratio. Explain how the values were determined.<\/li>\n\n\n\n<li>Calculate the Year 2 break-even quantity, break-even sales, and contribution margin ratio. Explain how the values were determined.<\/li>\n\n\n\n<li>Determine the number of flights (units) needed to retain a profit of $10,000 in Year 3, assuming the company does allow for referrals.<\/li>\n\n\n\n<li>Recommend if the bank should issue the loan.<\/li>\n<\/ol>\n\n\n\n<p><strong>Superior papers will:<\/strong><\/p>\n\n\n\n<p><em>Perform all calculations correctly.<\/em><\/p>\n\n\n\n<p><em>Articulate the approach to solving the problem.<\/em><\/p>\n\n\n\n<p><em>Explain the relationship of the costs to the concept of contribution margin.<\/em><\/p>\n\n\n\n<p><em>Discuss any limitations of the data, including what may be missing.<\/em><\/p>\n\n\n\n<p><em>Conclude on whether the bank should issue the loan.<\/em><\/p>\n\n\n\n<p><em>Readings:<\/em><\/p>\n\n\n\n<p><em>1. Walther, L. M. &amp; Skousen, C.J. (2009).&nbsp;Managerial and Cost Accounting. https:\/\/library.ku.ac.ke\/wp-content\/downloads\/2011\/08\/Bookboon\/Accounting\/managerial-and-cost-accounting.pdf (attached). Chapter 8&nbsp; This text explains cost-volume-profit analysis with break-even and contribution margin examples and further details on how to determine targeted income levels.<\/em><\/p>\n\n\n\n<p><em>2. Heisinger, K., &amp; Hoyle, J. B. (n.d.). Accounting for Managers. https:\/\/2012books.lardbucket.org\/books\/accounting-for-managers\/index.html Chapter 6 \u2013 How is Cost-Volume-Profit Analysis Used for Decision Making? This text also explains various CVP analyses and illustrates them with applied examples<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this paper, please discuss the following case study. In doing so, explain your approach to the problem, support your [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[],"class_list":["post-15079","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Cost Analysis for Parasailing Company - Highclasswriters<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/highclasswriters.com\/blog\/cost-analysis-for-parasailing-company\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cost Analysis for Parasailing Company - Highclasswriters\" \/>\n<meta property=\"og:description\" content=\"In this paper, please discuss the following case study. 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