Analysis for Decision Making ADM-1 Break-even number of passengers for a cruise Ocean Escape Cruise Lines has a boat with a capacity of 1,200 passengers. An eight-day ocean cruise involves the following costs: Crew Fuel Fixed operating costs $240,000 60,000 800,000 The variable costs per passenger for the eight-day cruise include the following: Meals Variable operating costs $900 400 The price of the cruise is $2,400 per passenger. A. Determine the break-even number of passengers for the eight-day cruise. B. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise? C. Assume the cruise was booked to capacity. What would be the profit or loss for the cruise? If the cruise cannot book enough passengers to break even, how might the cruise line respond? D. ADM-2 Break-even subscribers for a video service Star Stream is a subscription-based video streaming service. Subscribers pay $120 per year for the service. Star Stream licenses and develops content for its subscribers. In addition, Star Stream leases servers to hold this content. These costs are not variable to the number of subscribers, but must be incurred regardless of the subscriber base. In addition, Star Stream compensates telecommunication companies for bandwidth so that Star Stream customers receive fast streaming services. These costs are variable to the number of subscribers. These and other costs are as follows: 1 Server lease costs per year Content costs per year Fixed operating costs per year Bandwidth costs per subscriber per year Variable operating costs per subscriber per year A. Determine the break-even number of subscribers. $ 100,000,000 2,000,000,000 900,000,000 15 25 B. Assume Star Stream planned to increase available programming and thus increase the annual content costs to $2,600,000,000. What impact would this change have on the break-even number of subscribers? C. Assume the same content cost scenario in (B). How much would the annual subscription need to change in order to maintain the same break-even as in (A)? ADM-3 Break-even number of guests for a theme park MusicLand Theme Park has an average daily admission price of $60 per guest. The following financial data are available for analysis: Daily operating fixed costs Variable daily operating cost per guest Average daily concession revenue per guest Average daily variable cost of concession items per guest $750,000 24 30 16 Additional operating data indicate that the park averages 24,000 daily guests during the week- days and 40,000 average daily guests on Saturdays and Sundays. A. Determine the break-even number of guests per day at the theme park. B. How much profit does Musicland earn on an average weekday? C. How much profit does MusicLand earn on an average weekend day? D. Determine the revised break-even if the daily fixed costs increased to $1,000,000. E. Would the theme park still remain profitable for an average weekday under the scenario in (D)