Answer
To calculate the revenue needed to earn a target operating income of \$102,000, use the formula:
Required Revenue = (Fixed Costs + Target Operating Income) $\div$ (1 - (Variable Cost per Tour $\div$ Selling Price per Tour))
Required Revenue = (\$570,000 + \$102,000) $\div$ (1 - (\$6,300 $\div$ \$7,500))
Required Revenue ≈ \$972,000
Work Step by Step
To calculate the revenue needed to earn a target operating income of \$102,000, use the formula:
Required Revenue = (Fixed Costs + Target Operating Income) $\div$(1 - (Variable Cost per Tour $\div$ Selling Price per Tour))
Required Revenue = (\$570,000 + \$102,000) $\div $(1 - (\$6,300 $\div$ \$7,500))
Required Revenue ≈ \$972,000
