Ch18 Case Study Assignment - Part 2 Hakim is the manager for Tahoe bed and...
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Ch18 Case Study Assignment - Part 2 Hakim is the manager for Tahoe bed and breakfast. Hakim is currently considering an upgrade to the breakfast service to attract more business that will add $3 in variable costs to Tahoe's current variable costs of $15. Hakim is also proposing that a 10% room rate increase (from $60 to $66 per room) will produce an increase in room rentals from 3,500 to 4,000 units. Fixed costs will remain at $126,000 for Tahoe. Compute and prepare a cvp analysis: Current Break-even point in units After Changes Increase/Decrease Margin of Safety Ratio After Changes Increase/Decrease to Profit/Loss Prepare the CVP Income Statement (Totals) CVP Income Statement: Current Sales revenes Less: Variable costs Contribution margin Less: Fixed costs Profit/Loss b. Explain and compare the per unit behavior and the total cost behavior for fixed costs. c. Explain relevant range: 1- Explain what the relevant range is. 2- Explain and provide an example when the straight-line relationship does not exist for fixed costs
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