Ocean 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. Ocean 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 $ 210,000 per month. Under these conditions, the breakeven point in tickets is 7,000 and the breakeven point in sales dollars is $350,000. Suppose Ocean Cruiseline embarks on a cost reduction drive and slashes fixed expenses from $ 210,000 per month to $ 180,000 per month.

1. Compute the new breakeven point in units and in sales dollars. Begin with the breakeven point units. Enter the formula, then compute the breakeven point. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.) = Breakeven units + + Now compute the breakeven point in sales dollars. Enter the formula, then compute the breakeven point. (Enter the contribution margin ratio as a whole percent. For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.) i = Breakeven sales Jil + + 2. Is the breakeven point higher or lower than under the original conditions? Explain how changes in fixed costs generally affect the breakeven point. The breakeven point is V. All else being equal, v in fixed costs will decrease the breakeven point while in fixed costs will increase the breakeven point. + Contribution margin per unit Contribution margin ratio Fixed expenses Operating income Units sold Variable expenses