Luxury

Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for

$80

per passenger.

Luxury

Cruiseline's variable cost of providing the dinner is

$40

per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is

$240,000

per month. The company's relevant range extends to

16,000

monthly passengers.

Use this information 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

13,000

passengers.

d. Use the contribution margin ratio to project operating income if monthly sales revenue totals

$515,000.

a. What is the contribution margin per passenger?

First identify the formula, then compute the contribution margin per passenger.

Fixed cost per passenger	-	Sales price per passenger	=	Contribution margin per passenger
d	-	d	=	f