Use the information from the FunTime Cruiseline Data Set. Suppose FunTime Cruiseline decides to offer two types of dinner cruises: regular cruises and executive cruises. The executive cruise includes complimentary cocktails and a five-course dinner on the upper deck. Assume that fixed expenses remain at \($210,000\) per month and that the following ticket prices and variable expenses apply:

Assuming that FunTime Cruiseline expects to sell four regular cruises for every executive cruise, compute the weighted-average contribution margin per unit. Is it higher or lower than a simple average contribution margin? (A simple average is calculated by adding both contribution margins per passenger together and dividing by two.) Why? Is it higher or lower than the regular cruise contribution margin calculated in S7-1? Why? Will this new sales mix cause FunTime Cruiseline’s breakeven point to increase or decrease from what it was when it sold only regular cruises?

FunTime Cruiseline offers nightly dinner cruises departing from several cities on the East Coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for \($50\) per passenger. FunTime Cruiseline’s variable cost of providing the dinner is \($30\) per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is \($210,000\) per month. The company’s relevant range extends to 20,000 monthly passengers.

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Sales price per ticket... Variable expense per passenger.. Regular Cruise Executive Cruise $50 $100 $30 $ 40