Suppose
Northern
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 are
$212,000
per month and that the following ticket prices and variable expenses apply:
Suppose
Northern
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 are
$212,000
per month and that the following ticket prices and variable expenses apply:
Assuming that
Northern
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? Why? Is it higher or lower than the regular cruise contribution margin? Why? Will this new sales mix cause
Northern
Cruiseline's break-even point to increase or decrease from what it was when it sold only regular cruises?
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