Changes in sales price and variable costs (Learning Objective 3)}

Use the information from the Bay Cruiseline Data Set.

1. Suppose Bay Cruiseline cuts its dinner cruise ticket price from \(\$ 60\) to \(\$ 50\) to increase the number of passengers. Compute the new breakeven point in units and in sales dollars. Explain how changes in sales price generally affect the breakeven point.

2. Assume that Bay Cruiseline does not cut the price. Bay Cruiseline could reduce its variable costs by no longer serving an appetizer before dinner. Suppose this operating change reduces the variable expense from \(\$ 20\) to \(\$ 15\) per passenger. Compute the new breakeven point in units and in dollars. Explain how changes in variable costs generally affect the breakeven point.