CVP analysis, changing revenues and costs (continuation of 3-18). Carib Cruises changes its commission structure for travel
Question:
CVP analysis, changing revenues and costs (continuation of 3-18). Carib Cruises changes its commission structure for travel agents. Up to a ticket price of $720, the 8% com¬
mission applies. For tickets costing $720 or more, there is a fixed commission of $57.60.
Assume Sunshine Tours has fixed costs of $26,400 per month and variable costs of $34.80 per ticket (including a $14.40 delivery fee by Emory).
Required 1. What is the number of Toronto-to-Jamaica round-trip tickets fiunshine must sell each month to
(a) break even and
(b) make a target operating income of $12,000? Comment on the results.
2. fiunshine tours decides to charge its customers a delivery fee of $6 per ticket. How would this change affect your answers to
(a) and
(b) in requirement 1 ? Comment on the results.
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