Please refer to the attached scenarioCalculate the revenue generated by a 6-hour trip with the old boat (6 guests) and the new boat (8 guests) and compare the two figures. Identify the costs that changed. ScenarioBrad Winston is the owner and operator of Fishing Unlimited, a charter fishing businessoperated out of Oregon Inlet, NC. Brad has been taking groups of guests offshore to fish fortuna and marlin for over 15 years. He purchased his current fishing boat when he startedthe business, but now believes that a larger and better outfitted vessel would allow him toincrease the rate he charges per charter. Currently he can carry a maximum of 6 guestswhile the larger boat will carry up to 8. The larger boat would also require him to take 2deck hands on each outing, providing better service to his customers. Cost data for Brad'sbusiness is shown in the table below.Fishing UnlimitedAnnual straight-line depreciation on boat$ 8,300($175,000 original cost – $90,000 estimated resale value/20 years)Fuel Cost (per hour)Insurance Premium (annual)Maintenance and Repairs (annual)Fishing Tackle and Gear (original cost)Tackle and Bait (per guest)Deck Hand wages (per hour)Dock Fees (annual)Captain's License (annual)Food and Beverages (per guest)Professional Fees (per year)Dock Utilities (annual)$$ 1,900$ 3,500$ 7,000$$$ 2,400$ 20050202025$ 750$ 1,200Brad has someone interested in purchasing his existing boat for $80,000. He could use thiscash as a deposit on the new boat which will cost him $225,000. His banker estimates thepayments on the new boat will be about $1,500. The new boat is more fuel efficient and hebelieves he can cut his fuel costs by 10% but the more expensive boat will increase hisinsurance premium by 12%. He is also concerned that he will have to change to a largerboat slip which would increase his dock fees by 5%. The good thing about the new boat isthat he should save on maintenance and repairs, at least for the first 3 years. The only otherexpense Brad would incur with the new boat is adding some additional fishing tackle andgear to accommodate larger parties that he estimates would cost him about $1,500.His fees for both the old and the new boat are as follows:Old BoatNew Boat$$$$4 hours5506006 hours650700Full Day (9 hours)$ 1,100$ 1,200

Revenue is defined as the aggregate amount of the income generated through selling the goods as well…

Brad Winston is the owner and operator of Fishing Unlimited, a charter fishing business operated out of Oregon Inlet, NC. Brad has been taking groups of guests offshore to fish for tuna and marlin for over 15 years. He purchased his current fishing boat when he started the business, but now believes that a larger and better outfitted vessel would allow him to increase the rate he charges per charter. Currently he can carry a maximum of 6 guests while the larger boat will carry up to 8. The larger boat would also require him to take 2 deck hands on each outing. providing better service to his customers. Cost data for Brad's business is shown in the table below. Fishing Unlimited

Brad Winston is the owner and operator of Fishing Unlimited, a charter fishing business operated out of Oregon Inlet, NC. Brad has been taking groups of guests offshore to fish for tuna and marlin for over 15 years. He purchased his current fishing boat when he started the business, but now believes that a larger and better outfitted vessel would allow him to increase the rate he charges per charter. Currently he can carry a maximum of 6 guests while the larger boat will carry up to 8. The larger boat would also require him to take 2 deck hands on each outing. providing better service to his customers. Cost data for Brad's business is shown in the table below. Fishing Unlimited

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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