Coast Cruiseline offers nightly dinner cruises off the coast of Nanaimo and Victoria. Dinner cruise tickets sell for $60 per passenger. Coast Cruiseline's variable cost of providing the dinner is $15 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $225,000 per month. Under these conditions, the break-even point in tickets is 5,000 and the break-even point in sales dollars is $300,000.

Suppose Coast Cruiseline embarks on a cost-reduction drive and slashes fixed expenses from $225,000 per month to $198,000 per month

. 1. Compute the new break-even point in units and in sales dollars.

2. Is the break-even point higher or lower than under the original conditions?

Explain how changes in fixed costs generally affect the break-even point.