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Suppose Royal Canadian Cruiseline decides to offer two types of dinner cruises: regular cruises and executive cruises. The executive cruise includes complimentary cocktails and a
Suppose Royal Canadian 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 $208,000 per month and that the following ticket prices and variable expenses apply: (Click the icon to view the data.) Assuming that Royal Canadian 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 Royal Canadian Cruiseline's break-even point to increase or decrease from what it was when it sold only regular cruises? Assuming that Royal Canadian Cruiseline expects to sell four regular cruises for every one executive cruise, compute the weighted average contribution margin per unit. Determine the formula, and then complete the table one section at a time. Ticket prices and variable expenses Deduct: Executive Cruise Regular Cruise $ 58 * Sales mix in units $ 145 Sale price per ticket Variable expense per passenger 18 50 Weighted average contribution margin per unit Print Done
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