This is about Health Cruises Inc.

The minimum amount of passengers Health cruises needs to break even is 227 passengers. to make profit they need at least 228 people. 20 additional passengers are most likely to sign up for $6,000. The new number of passengers is 220 people. Assuming that there is a cash flow of $1,300 per passenger, the revenue earned can be calculated as shown below. EBIT=(240*1,300)=$286,000 This means Health Cruises decreases the among owed by $26,000. The company is still in debt of $15,000 ($295,000+$6,000-$286,000). For $15,000, there are 40 additional people that are expected to sign up. The new count of passengers becomes 240. Assuming that there is a cash flow of $1,300 per passenger, the revenue earned can be calculated as shown below. EBIT=(240*$1,300)=$312,000. This gets the company to a net profit of $2,000 because $295,000+$15,000=$310,000. The ambitious campaign would be the best choice because even though it is more expensive it would help get more people on the cruise ship and give a profit.

Starting with the next cruise, Health Cruises has been approached by the On-a-Whim Agency to act as travel agent and representative in booking the Health Cruise. On-a-Whim requires a 20% margin and Health Cruises fixed costs will remain the same due to on-going expenses and advertising. a. How much revenue would Health Cruises receive from each customer? [Hint - You must factor in the On-a-Whim margin.] Health Cruises would gain a revenue of 880 from each customer. This can be calculated as shown below: (1320-(1320*.2))-176=880 b. What is the new break even [show your Break Even calculations]. The new break even is 2845 and can be calculated as shown below: 250,000/880=284.09. (rounding up, 285) c. Would you recommend that Health Cruises hire On-a-Whim and why or why not? I would not recommend Health Cruises to hire On-A-Whim because the revenue earned from each passenger would decrease. This causes a higher break-even point, On the previous cruise, the break even was 227 and they had 200 passengers registered. If they did hire On-A-Whim, it would not be realistic to expect 284 passengers from an original 200 passengers to break even. Even if Health cruises hit their max amount of passengers, they would only be making a small profit because it would only be made off of the 16 passengers because of the outrageously high break even of 284.

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