Suppose Flow Cruiseline decides to offer two types of dinner cruises: regular cruises and executive cruises. The executive cruise includes complimentary cocktails and a five-course dinner on the upper deck. Assume that fixed expenses remain at $ 450,000 per month and that the following ticket prices and variable expenses apply:

Assuming that Flow Cruiseline expects to sell four regular cruises for every executive cruise, compute the weighted-average contribution margin per unit. Is it higher or lower than a simple average contribution margin? (A simple average is calculated by adding both contribution margins per passenger together and dividing by two.) Why? Is it higher or lower than the regular cruise contribution margin of $ 30? Why? Will this new sales mix cause Flow Cruiseline's breakeven point to increase or decrease from what it was when it only sold regular cruises?

Regular Cruise Executive Cruise Sale price.per.ticket. . . . . . . . . . . . . . $ $ 120 60 30 Variable expense per passenger.... 60 Assuming that Flow Cruiseline expects to sell four regular cruises for every one executive cruise, compute the weighted-average contribution margin per unit. Determine the formula, then complete the table one section at a time. Regular Executive Total Less: Weighted average contribution margin per unit A simple average contribution margin would be $ Regular Executive Total Contribution margin Contribution margin per ticket Sale price per ticket Sales mix Variable cost per ticket Is the weighted average contribution margin higher or lower than a simple average contribution margin? The weighted average is v the simple average because Flow Cruiseline sells regular cruises, which have a contribution margin, than executive cruises. Is the weighted average contribution margin higher or lower than the regular cruise contribution margin of $30? Why? The weighted-average contribution margin is than the contribution margin of regular cruises because Flow Cruiseline sells some executive cruises, and they have a contribution margin than regular cruises. Will this new sales mix cause Flow Cruiseline's breakeven point to increase or decrease from what it was when it only sold regular cruises? Because the new sales mix creates a v weighted average contribution margin, Flow Cruiseline will need to sell cruises, in total, to breakeven than when they just sold regular cruises