CVP analysis, changing revenues and costs. Sunshine Tours is a travel agency specializing in cruises between Miami and Jamaica. It books passengers on Carib Cruises.

Sunshine’s fixed costs are $22,000 per month. Carib charges passengers $1,000 per round trip ticket.

REQUIRED Calculate the number of tickets Sunshine must sell each month to

a) break even and b)

make a target operating income of $10,000 per month in each of the following independent cases.

1. Sunshine’s variable costs are $35 per ticket and Carib Cruises pays Sunshine 8% commission on the ticket price.

2. Sunshine’s variable costs are $29 per ticket. Carib Cruises pays Sunshine 8% commission on the ticket price.

3. Sunshine’s variable costs are $29 per ticket. It receives a $48 commission per ticket from Carib Cruises. Comment on the results.

4. Sunshine’s variable costs are $29 per ticket. It receives a $48 commission per ticket from Carib Cruises. It charges customers a delivery fee of $5 per ticket. Comment on the results.

LO1