Flow Cruiseline offers nightly dinner cruises departing from several cities on the East Coast of the United States 1 . Suppose Flow Cruiseline cuts its dinner cruise ticket price from $50 to $40 to increase the number of including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $50 per passenger. Flow passengers. Compute the new breakeven point in units and in sales dollars. Explain how changes in Cruiseline's variable cost of providing the dinner is $20 per passenger, and the fixed cost of operating the vessels sales price generally affect the breakeven point. (depreciation, salaries, docking fees, and other expenses) is $270,000 per month. Under these conditions, the 2. Assume that Flow Cruiseline does not cut the price. Flow Cruiseline could reduce its variable costs by breakeven point in tickets is 9,000 and the breakeven point in sales dollars is $450,000. no longer serving an appetizer before dinner. Suppose this operating change reduces the variable expense from $20 to $10 per passenger. Compute the new breakeven point in units and in dollars. Explain how changes in variable costs generally affect the breakeven point. . . . . . appropriate input field.) Fixed expenses + Operating income Contribution margin ratio = Breakeven sales $ 270,000 + $ 0 50 % = $ 540,000 All else being constant, a decrease in sales price will decrease the contribution margin per unit and contribution margin ratio. The breakeven point will therefore increase 2. Assume that Flow Cruiseline does not cut the price. Flow Cruiseline could reduce its variable costs by no longer serving an appetizer before dinner. Suppose this operating change reduces the variable expense from $20 to $10 per passenger. Compute the new breakeven point in units and in dollars. Explain how changes in variable costs generally affect the breakeven point. Let's begin with the breakeven point units. Enter the formula, then compute the breakeven point in units. (Round your final answers up to the nearest whole number. For amounts with a $0 balance, make sure to enter "0" in the appropriate input field.) Fixed expenses Operating income Contribution margin per unit = Breakeven units $ 270,000 $ $ 40 6,750 Now compute the breakeven point in sales dollars. Enter the formula, then compute the breakeven point in sales. (Enter the contribution margin ratio as a whole percent. For amounts with a $0 balance, make sure to enter "0" in the appropriate input field.) Operating income Fixed expenses + Contribution margin ratio Breakeven sales 0 270000 % =