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Activity #1 Calculate Unit CM, CM Ratio, Breakeven and Target Profit Bay Cruiseline offers nightly dinner cruises off the coast of Miami, San Francisco, and
Activity \#1 Calculate Unit CM, CM Ratio, Breakeven and Target Profit Bay Cruiseline offers nightly dinner cruises off the coast of Miami, San Francisco, and Seattle. Dinner cruise tickets sell for $50 per passenger. Bay Cruiseline's variable cost of providing the dinner is $20 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 15,000 monthly passengers. Compute Contribution Margin and Contribution Margin Ratio: a. What is the contribution margin per passenger? b. What is the contribution margin ratio? c. Use the contribution margin to project operating income if monthly sales total 10,000 passengers. d. Use the contribution margin ratio to project operating income if monthly sales revenue totals $400,000. e. If Bay Cruiseline sells an additional 500 tickets, by what amount will its operating income increase (or operating loss decrease)
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