Question
Royal Canadian Cruiseline offers nightly dinner cruises off the coast of Nanaimo and Victoria. Dinner cruise tickets sell for $60 per passenger. Royal Canadian
Royal Canadian Cruiseline offers nightly dinner cruises off the coast of Nanaimo and Victoria. Dinner cruise tickets sell for $60 per passenger. Royal Canadian Cruiseline's variable cost of providing the dinner is $15 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $180,000 per month. The company's relevant range extends to 15,000 monthly passengers. The break-even sales are 4,000 tickets sold. a. Compute the operating leverage factor when Royal Canadian Cruiseline sells 15,000 dinner cruises. b. If volume increases by 16%, by what percentage will operating income increase? c. If volume decreases by 11%, by what percentage will operating income decrease? a. Compute the operating leverage factor when Royal Canadian Cruiseline sells 15,000 dinner cruises. First identify the formula, and then compute the operating leverage factor. (Round your answer to two decimal places, X.XX.) Operating leverage factor b. If volume increases by 16%, by what percentage will operating income increase? (Round your answer to two decimal places, X.XX.) If volume increases by 16%, the percentage that operating income will increase is %. c. If volume decreases by 11%, by what percentage will operating income decrease? (Round your answer to two decimal places, X.XX.) If volume decreases by 11%, the percentage that operating income will decrease is %.
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