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Suppose Luxury Cruiseline decides to offer two types of dinner cruises: regular cruises and executive cruises. The executive cruise includes complimentary cocktails and a five-course
Suppose Luxury 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 $270,000 per month and that the following ticket prices and variable expenses apply: (Click the icon to view the ticket prices and expenses.) Regular Cruise Sale price per ticket ............ $ 60 Variable expense per passenger 30 Executive Cruise $ 100 40 Assuming that Luxury 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 Luxury Cruiseline's breakeven point to increase or decrease from what it was when it only sold regular cruises? Assuming that Luxury Cruiseline expects to sell four regular cruises for everyone 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 Weighted average contribution margin per unit A simple average contribution margin would be 5 L Is the weighted average contribution margin higher or lower than a simple average contribution margin? The weighted average is the simple average because Luxury Cruisine sells regular cruises, which have a contribution margin, kecutive Is the weighted average contribution margin higher or lower than the regular cruise contribution margin of $307 Why? The weighted average contribution margin is than the contribution margin of Segular cruises because Luxury Cruisine sells some executive cruises, and they have a contribution margin than regular cruises We new sales mix cause Luxury Cruiseline's breakeven point to increase or decrease from what it was when it only sold regular cruises? Because the new sales in creates a weled average contribution margin, Luxury Cruiseline will need to se e in seven than when they told
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