Mr Zoo is planning to set up a mini Zoo in Howick. The following relates to...

50.1K

Verified Solution

Question

Accounting

Mr Zoo is planning to set up a mini Zoo in Howick.
The following relates to different pricing plans of visiting thezoo and costs of running the zoo.
Pricing Plan 1 - $30 per person (a special pack will beincluded)
Pricing Plan 2 - $25 per visitor (the special pack not to beincluded)
Variable Costs per visitor
Special Pack - $8
Zoo Consumables - $7
Zoo Expenses - $2
Total Fixed Costs - $200,000
REQUIRED: Studythe information above then answer the following questions.
Using the CVP formula, calculate the number of units (and itsdollar amount) for achieving
Breakeven
A profit of $30,000 for both plans.
Calculate the Contribution Margin ratio for both plans.
Describe the meaning of Contribution Margin ratio.
Explain the relationship between Contribution Margin ratio andNumber of Breakeven units.
Explain why it is important to calculate Margin of Safety.
State TWO examples of fixed cost in relation to the zoo.
Write a report to Mr Zoo for recommending which pricing planshould be adopted. Your recommendation should include at least ONEpiece of financial and ONE piece of non-financial information.

Answer & Explanation Solved by verified expert

3.7 Ratings (399 Votes)

1 Number of units and its dollar amount for achieving breakeven a Plan 1 Total fixed cost contribution per unit 20000030872 20000013 15385 units 15385 x 30 461550 b Plan 2 Total fixed cost contribution per unit 2000002572 20000016 12500 units 12500 x 25 312500 2 Number of units and its dollar amount for achieving Profit of 30000 for both plans a Plan 1 Total fixed cost Desired profit contribution per unit 2000003000030872 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Mr Zoo is planning to set up a mini Zoo in Howick.The following relates to different pricing plans of visiting thezoo and costs of running the zoo.Pricing Plan 1 - $30 per person (a special pack will beincluded)Pricing Plan 2 - $25 per visitor (the special pack not to beincluded)Variable Costs per visitorSpecial Pack - $8Zoo Consumables - $7Zoo Expenses - $2Total Fixed Costs - $200,000REQUIRED: Studythe information above then answer the following questions.Using the CVP formula, calculate the number of units (and itsdollar amount) for achievingBreakevenA profit of $30,000 for both plans.Calculate the Contribution Margin ratio for both plans.Describe the meaning of Contribution Margin ratio.Explain the relationship between Contribution Margin ratio andNumber of Breakeven units.Explain why it is important to calculate Margin of Safety.State TWO examples of fixed cost in relation to the zoo.Write a report to Mr Zoo for recommending which pricing planshould be adopted. Your recommendation should include at least ONEpiece of financial and ONE piece of non-financial information.