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Question 6. Executive Cruiseline offers nightly dinner cruises off the coast of Nanaimo and Victoria. Dinner Cruise tickets sell for $60 per passenger. Executive Cruiseline's
Question 6. Executive Cruiseline offers nightly dinner cruises off the coast of Nanaimo and Victoria. Dinner Cruise tickets sell for $60 per passenger. Executive 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. The company's relevant range extends to 15,000 monthly passengers. The break-even units are 5,250 tickets sold. Executive Cruiseline expects to sell 10,000 dinner cruises. A. Compute the margin of safety in dollars. 2 points B. Compute the operating leverage factor if Executive Cruiseline sells 10,000 dinner cruises. 3 points C. If volume decreases by 7%, by how much will operating income change? Will operating income increase or decrease? 2 points
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