Live It 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 $$50$ per

passenger. Live It Cruiseline's variable cost of providing the dinner is $$20$ per passenger, and the fixed

cost of operating the vessels $($depreciation$,$ salaries, docking fees, and other expenses$)$ is $$270,000$ per

month. Under these conditions, the breakeven point in tickets is $9,000$ and the breakeven point in sales

dollars is $$450,000.$

Suppose Live It Cruiseline cuts its dinner cruise ticket price from $$50$ to $$40$ to increase 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.

Assume that Live It Cruiseline does not cut the price. Live It 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.

price generally affect the breakeven point.

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