FunTime Cruiseline offers nightly dinner cruises departing from several cities on these ern 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 rel evant range extends to 20,000 monthly passengers. S7-1 Compute unit contribution margin and contribution margin ratio (Learning Objective 1) Use the information from the FunTime Cruiseline Data Set to compute the following: a. What is the contribution margin per passenger? b. What is the contribution margin ratio? c. Use the unit contribution margin to project operating income if monthly sales total 17,000 passengers d. Use the contribution margin ratio to project operating income if monthly sales rev. enue totals $595,000. Use the company sell? COLLOCang income ty $75 Changes in sales price and variable costs (Learning Objective 3) Use the information from the FunTime Cruiseline Data Set 1. Suppose Fun Time Cruiseline cuts its dinner Cruise ticket price from $50 to $45 to in crease the number of passengers. Compute the new breakeven point in units and in sales dollars. Explain how changes in sales price generally affect the breakeven point 2. Assume that FunTime Cruiseline does not cut the price. FunTime Cruiseline could re- duce its variable costs by no longer serving an appetizer before dimer. Suppose this operating change reduces the variable expense from 530 to $20 per passenger . Com- pute the new breakeven point in units and in dollars. Explain how changes in variable costs generally affect the breakeven point 57-6 Changes in fixed costs (Learning Objective 3) Use the information from the FunTime Cruiseline Data Set. Suppose FunTime Cruisline embarks on a cost reduction drive and slashes fixed expenses from $210,000 per month to $150,000 per month 1. Compute the new breakeven point in units and in sales dollars. 2. Is the breakeven point higher or lower than in 57-3? Explain how changes in fixed costs generally affect the breakeven point. 57.7 Compute weighted-average contribution margin (Learning Objective 4) 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 5210,000 per month and that the following ticket prices and variable expenses apply: Regular Cruise Executive Cruise Sales price per ticket $50 $100 Variable expense per passenger $30 5.40 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 le average contribution margin? (A simple average is calculated by adding ner passenger together and dividing by two ) Why? Is it higher in margin calculated in S7-1? Why? Will this - to increase or decrease from
