Use whole numbers for all of your answers.

What are total Monthly Fixed Costs?

How many charters are run per month?

In general, how many of the monthly charters are group charters?

In general, how many of the monthly charters are individually booked charters?

What percentage of fixed costs should be allocated to group charters?

What percentage of fixed cost should be allocated to individually booked charters?

How much fixed cost should be allocated to group charters?

How much fixed cost should be allocated to individually booked charters?

sleeping with the fishes Business Name: Sleeping With The Fishes

Note: For all calculations, assume each month has four weeks and ignore all taxes.

Luca Brazi owns a fishing boat charter business he calls Sleeping With the Fishes. He runs

charters $4$ mornings per week, three weeks per month. Luca charges $$300$ per person for his

charters. The boat can hold up to $12$ passengers, but on average he goes out each morning

with eight passengers. Groups can charter the entire boat for $$3,000.$

Luca bought the boat two years ago for $$130,000.$ He expects that he will be able to run

charters on the boat for a total of ten years. His daughter has offered to buy the boat for

$$10,000$ when he upgrades to a new one when this boat is ten years old.

For each charter, Luca hires a crew of two at a rate of $$\frac{150}{?}$ day each. The boat uses

approximately $80$ gallons of gas for each tour. Luca currently pays $$\frac{4\mathrm{.}15}{?}$ gallon at the marina.

Luca feeds his crew and guests $($including himself$)$ a lunch that costs $$12$ per person. Because

he often doesn't know how many passengers will be on a group tour, Luca purchases lunch for

$12$ passengers for group tours. Luca carries insurance that costs $$6,\frac{000}{?}$ year. His business

license costs $$\frac{624}{?}$ year and the marina slip where he keeps his boat costs $$2,\frac{000}{?}$ month. Luca

buys advertising space in various magazines for a total of $$600$ per quarter. Luca generally

books three groups per month. All other charters include passengers who have booked

individually.

Stop here and complete Part $1$ in Module $2$

Part $1$: Types of costs $(12$ points completed in Module $2)$

List all of Luca's costs and indicate whether they are fixed or variable, product or period

and direct or indirect. Stop here and complete Parts $2\mathrm{.}1$ and $2\mathrm{.}2$ in Module $7$

Part $2\mathrm{.}1$ Contribution Margin and Fixed Costs $(24$ points completed in Module $7)$

Assuming that one charter is one cost object, calculate Luca's contribution margin for:

One charter with eight individually booked passengers and one group charter?

What are Luca's monthly fixed costs?

Part $2\mathrm{.}2$ Net Income and Cash Flow $(24$ points completed in Module $7)$

Assume Luca allocated fixed costs based on number of charters per month.

How much monthly Net Income is generated by individually booked charters?

How much monthly Net Income is generated by group charters?

What is Luca's total monthly Net Income?

How much monthly Cash Flow if generated by individually booked charters?

How much monthly Cash Flow is generated by group charters?

What is Luca's total monthly Cash Flow?

Read for Part $3$:

During his seagoing travels, Luca has stumbled upon an island in the North Atlantic this is

rumored to have a buried treasure. He would like to spend more time looking for this treasure,

but doesn't want to quit his business altogether, you know, in case there is no treasure.

Luca is wondering what the minimum number of charters he needs to have per month to cover

all of his costs $($including any non$-$cash expenses$).$ He assumes he cannot change his product

mix of $9$ individually booked charters for every $3$ group charters.

Stop here and complete Part $3$ in Module $7$

Part $3$: Composite Units and Breakeven $(10$ points completed in Module $7)$

Calculate the number of composite units Luca would need to sell to break even each

month and the minimum number of charters Luca could run each month and still cover

his costs.

Continue Reading Below for Parts $4$ & $5$ in Module $14$s & $15$

Investment Options

Luca has noticed an increased interest in shark fishing. But to offer shark fishing charters, he's

going to need a bigger boat. Luca estimates that he could fill a $20$ passenger boat $12$ days per month without offering any group discounts. The bigger boat would cost $$1,500,000.$ Luca

estimates he can use the boat in his business for $15$ years and can sell the boat for $$40,000$ at

the end of those $15$ years. Luca would need to buy $150$ gallons of fuel per charter. He could

charge $$500$ per passenger. His food costs per person would remain unchanged. He