StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Organizing Excursions for Tourists - Costs and Selling Price - Assignment Example

Cite this document
Summary
The paper “Organizing Excursions for Tourists - Costs and Selling Price” is an appropriate example of a finance & accounting assignment. You are living in El Calafate, Patagonia, nearby one of the most beautiful glaciers in the world, the Périto Moreno.  You want to organize excursions for tourists to the glacier. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.5% of users find it useful

Extract of sample "Organizing Excursions for Tourists - Costs and Selling Price"

Assessment 2 – Advance Diploma of Business You may choose to work in pair or individually You are living in El Calafante, Patagonia, near by one of the most beautiful glaciers in the world, the Périto Moreno. You want to organize excursions for tourists to the glacier. The tourists will be picked up at their hotel(s) in the morning, then they will be taken to the glacier where a picnic is served, and after the visit you will take them back to their hotel(s). Costs and selling price: The break even point. First, you have to determine your fixed and variable costs Fixed costs. You will need: An office: rent 30 $ per month------------ 360 $ per year An insurance:------------------------------ 40 $ per year Advertising:-------------------------------- 1,000 $ Per year Office supplies:---------------------------- 600 $ per year Telephone:--------------------------------- 500 $ per year Depreciation on station wagon: 6,666.67 $ Your salary ---------------------------------- 6,000 $ per year TOTAL:------------------------------------15,166.67 $ per year Depreciation of the station wagon = $20,000/3 years =$6,666.67 Your operational revenue from sales was 30 000 $ last year. And you also know that you sold 1000 tours last year. What is your selling price? Selling price = Total revenue/ number of tours =$30,000/1000 =$30 per tour Question 1 What is your Contribution margin per tour? Contribution margin = Revenue/customer-variable cost/customer =$30-$17.125 = $12.875/tour Variable costs One tour will be no longer than one day. A casual driver salary will be 10$ per day all charges included. 30 liters per day cost 50 cents per liter For lunch each tourist will cost 8 $ per day Assumption- the company will operated 365days and hence the 1,000 tours are spread throughout the year. Therefore, variable cost per tour/number of tours assuming there is at least one tour on any given day and hence the above expenses are incurred on a daily basis. Total variable cost = $10*365 +(30*.5)*365+ 8*1000 = $3,650+$5,475+$8,000 =$17,125 Variable cost per tour=$17,125/1,000 =$17.125 Question 2 What is the variable cost per tour? =$17,125/1,000 =$17.125 per tour Question 3 What is the Break-even point? =(FC/P-V) Where P= Price per unit FC= Fixed cost V= variable cost per unit Break-even point in sales units= $15,166.67/30-17.125 = 1,178 tours Break even point in sales =$1,178*30 = $35,340 Question 4 How much money do you need to invest to start this business? (See next page) Assumption: As can be seen above, last year we must have made a loss since the break-even point was much more than the total revenue under the above conditions. In this regard, we would have to increase the number of tours to about 1,500 tours so that we can make profit under the above conditions. In this regard, we would also have to increase the advertising costs by $500 to $1,500. We assume that we will operate for 275 days within the first year of operations bearing in mind that we will not operate within the first three months. In this regard, such costs as chauffer’s salary, depreciation and fuel will be incurred propotionately. We assume that we will incur sundry expenses worth $2000 within the year The amount of money you need: The cash flow projection. Right now, you have to calculate how much money you need for starting your project For this purpose, you just have to establish your cash flow projection for the 12 months to come (we will use 4 quarters to simplify). Let’s suppose that when you bought the Station wagon you paid 50 % of the amount in cash. The rest is to be paid within 6 months. Let’s also suppose a delay of 3 months between the start up of your company and the appearance of your first clients. According to this hypothesis, your cash flow projection should be the following:   1st quarter 2nd quarter 3rd quarter 4th quarter Total Opening Cash Balance 0 $3,870 $5 $6,115 Cash receipt  $17,100   $15,000 $15,000  $15,000    Number of tours 0 500 500 500 $1,500 Sales 0 $15,000 $15,000 $15,000 $45,000 Total cash $17,100 $18,870 $15,005 $21,115 $72,090 Cash expenditures           Fixed costs:           Advertising $750 $250 $250 $250 $1,500 Office supplies $150 $150 $150 $150 $600 Telephone $200 $100 $100 $100 $500 Insurance $40 $40 Rent $90 $90 $90 $90 $360 Manager’s salary $1,500 $1,500 $1,500 $1,500 $6,000 Total variable cost $2,730 $2,090 $2,090 $2,090 $9,000 Variable costs: Station wagon $10,000 $10,000 $20,000 Chauffeur $910 $920 $920 $2,750 Fuel $1,365 $1,380 $1,380 $4,125 Food/Sundry expenses $500 $4,500 $4,500 $4,500 $14,000 Total $13,230 $18,865 $8,890 8,890 $49,875 Net cash flow $17,100 $18,870 $15,005 $21,115 Closing Cash Balance $3,870 $5 $6,115 $12,225 $12,225 Question 5 Develop a Balance sheet for the first financial year for El Calafante Make assumptions as appropriate (Write your assumptions in your report) Use template provided in class (from www.business.gov.au) Your assignment will be marked according to your assumptions 1. The only fixed assets that the company has are the vehicle and office equipment valued at $5,000 2. There are no receivables and cash is the only current assets 3. There is $5,000 worth of accounts payables at the end of the period relating to office equipment 4. The owner contributed $17,100 during the start up 5. There are no long-term liabilities EL Calafante Balance Sheet As at 30th June 2013 Assets Current assets Cash $12,225.00 Total current assets $12,225.00 Non-current assets Station Wagon $20,000.00 Accumulated depreciation station wagon ( $6666.67) $13,333.33 Office equipment $5,000.00 Total non-current assets $18,333.33 Total assets $30,558.33 Liabilities Current liabilities Accounts payable $5,000.00 Total current liabilities $5,000.00 Total liabilities $5,000.00 Owner’s equity Capital $17,100.00 Retained income $8,458.33$25,558.33 Total liabilities and owner’s equity $30,558.33 Question 6 Develop a profit and loss statement for the first year for El Calafante Make assumptions as appropriate (Write assumptions on report) Use template provided in class (from www.business.gov.au) El Calafante Profit and Loss Account For the period ended 30th June 2013 Excursion service revenue $45,000 Less expenses: Advertising $1,500.00 Office supplies $600.00 Telephone $500.00 Insurance $40.00 Rent $360.00 Manager’s salary $6,000.00 Depreciation (station wagon) $6,666.67 Chauffeur $$2750.00 Fuel $4,125.00 Food $12,000.00 Sundry expenses $2,000.00$36,541.67 Profit before tax $8,458.33 Assumptions Since 1,000 tours led to a loss, it is assumed that we will strive to achieve 1,500 tours at $30 each. Question 7 Work out the Liquidity Ratios and write your conclusions Current ratio/working capital Current ratio = current asset/current liabilities =$12,225/$5,000 =2.45 Working capital = Current assets – current liabilities = $12,225-5,000 =$7,225 Quick Acid test ratio NB// There are no inventories given the nature of the business. Quick acid test ratio = (Current assets-inventories)/Current Liabilities =($12,225-0)/5,000 =2.45 Conclusion The company has good liquidity ratios. This implies that it is able to meet its current obligations without problems and hence its operations cannot be hampered by its inability to pay the short term liabilities since there are sufficient current assets to do this. In fact, its current assets are more than double the current liabilities. PROFIT CALCULATORS and write your conclusions Net profit margin =$8,458.33/$45,000 =18.8% The 18.8% margin is a good ratio for the company. This implies that the company has a good level of profitability being the first time that the company has been in operation. Question 8 Visit the website www.business.gov.au and describe the taxation obligations of a business. Take the example of El Calafante as a benchmark Businesses like El Calafante have the obligation of paying taxes to the government. In this regard, the company has the following obligations; i) El Calafante has the obligation of registering for various types of taxes. to do this, the company should register for a tax file number (TFN) ii) The company should register for goods and services tax for the various goods it buys as well as the services it offers. iii) The company should register for pay as you go withholdings and installments iv) The company should register for payroll tax for the employees it pays. v) After registration, the business is responsible for lodging monthly, quarterly, or annual activity statements, lodging pay as you go summary reports. vi) The business is also obligated to keep a good business record that explains the various business transactions. In this regard, El Calafante should keep records that relate to income tax, goods and services tax, its payments to employees as well as other business payments. Question 9 Research 3 different financial software used by medium size business such as El Calafante Software Features Price MYOB -One take accounting process -Easy to learn and use -gives over 170 financial reports for business intelligence -able to export reports to excel to ease analysis -Able to connect with words -It has multicurrency registers -efficient report printing -able to manage and process payroll $195 Kashoo -it applies credit card charge to customer -it can import data from quick books -it has an email template -invoice billing management -enables easier bank reconciliations -Kashoo has unmatched data security -high level of accessibility and sharing $15/month Fresh books -Gives various reports and enables tax -management and payment of bills -invoicing -computations -reports include balance sheets, accounts aging, expense reports, profit and loss reports -items sales reports -it exports reports to CSV or excel $19.95/month Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Organizing Excursions for Tourists - Costs and Selling Price Assignment Example | Topics and Well Written Essays - 1500 words, n.d.)
Organizing Excursions for Tourists - Costs and Selling Price Assignment Example | Topics and Well Written Essays - 1500 words. https://studentshare.org/finance-accounting/2105812-organize-excursions-for-tourists-costs-and-selling-price
(Organizing Excursions for Tourists - Costs and Selling Price Assignment Example | Topics and Well Written Essays - 1500 Words)
Organizing Excursions for Tourists - Costs and Selling Price Assignment Example | Topics and Well Written Essays - 1500 Words. https://studentshare.org/finance-accounting/2105812-organize-excursions-for-tourists-costs-and-selling-price.
“Organizing Excursions for Tourists - Costs and Selling Price Assignment Example | Topics and Well Written Essays - 1500 Words”. https://studentshare.org/finance-accounting/2105812-organize-excursions-for-tourists-costs-and-selling-price.
  • Cited: 0 times

CHECK THESE SAMPLES OF Organizing Excursions for Tourists - Costs and Selling Price

Tourism in Peru

In Peru tourism is a symbol of national pride, despite the fact that Cuzco is Peru's capital it is also one of the world's major tourist attractions, foreign tourists have continuously been flocking.... In Peru tourism is a symbol of national pride, despite the fact that Cuzco is Peru's capital it is also one of the world's major tourist attractions, foreign tourists have continuously been flocking there due to the discovery of the “lost city” sometimes back in 1911....
10 Pages (2500 words) Case Study

Adventure Travel International Tours Agency's Business Plan

TITAC intends to provide travel and adventure packages to tourists and local Australian residents across Australia.... … The paper “Adventure Travel International Tours Agency's Business Plan" is a thrilling example of a case study on marketing.... In order to determine successfully the financial viability of the business, it is necessary to determine, the adequate wages required and the return on the company's investments....
25 Pages (6250 words) Case Study

Setting up a Tourist Venture

Tourism is an industry that is ever-growing daily, as the number of tourists visiting tourism sites worldwide increases.... Tourism is an industry that is ever-growing daily, as the number of tourists visiting tourism sites worldwide increases.... Even if they may be out for an official business visit, many of these foreign visitors turn into tourists.... Most tourists spend a considerable time saving enough money specifically for their visit before embarking on it....
14 Pages (3500 words) Case Study

A Tourist Itinerary Made by Rosevine Travel Agency for Two Australian Couples

… The paper 'A Tourist Itinerary Made by Rosevine Travel Agency for Two Australian Couples " is a good example of a tourism case study.... The tourism industry is one of the subsectors that contribute to a large portion of most countries' GDP.... The tourism sector mostly involves the provision of services that must be tailored to the needs of each individual traveller (Choi, Murray & Kwan 2011)....
18 Pages (4500 words) Case Study

One-Week Itinerary for Couple in Venice - Justification of the Excursions in Terms of 7Ps

Your evening will start with a gentle Gondola tour along the Venetian waterways, in which you can share the Gondola with other tourists.... … The paper “One-Week Itinerary for Couple in Venice - Justification of the excursions in Terms of 7Ps - Justification of the excursions in Terms of 7Ps" is an exciting example of a case study on marketing.... The paper “One-Week Itinerary for Couple in Venice - Justification of the excursions in Terms of 7Ps - Justification of the excursions in Terms of 7Ps" is an exciting example of a case study on marketing....
14 Pages (3500 words) Case Study

Performing Tourism in Venice

We have been involved in the planning of numerous visits by tourists of different backgrounds in Venice many of whom have been pleased by the way we handled their tour and their stay in Venice.... In addition, we have planned for two joint excursions during the one week tour of Venice....
15 Pages (3750 words) Case Study

Itinerary for the Tourists Stays in the City of Venice

ustification for Choosing the excursions for the couples ... These seven P's of the marketing mix of service include Product, Place, price, and Promotion, Process and People and Physical evidence.... Among the P'S that have been chosen for this discussion are price, place, people promotion and product.... … The paper "Itinerary for the tourists Stays in the City of Venice" is an amazing example of an assignment on tourism....
15 Pages (3750 words) Assignment

Mount Excursions and Outside Camping

This report proposed the provision of a variety of package-experience for tourists.... Outside camping and mount excursions can offer an extraordinary experience for tourists who are seeking the adventure of sightseeing as well as participating in outdoor activities.... The theme of the experience is an extraordinary experience at cushioned costs.... Mountain excursions and outside camping have been suggested as additional experience-based products that can be provided to tourists....
10 Pages (2500 words) Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us