Xx S7-5 (similar to) Question Help 1. Excel Cruiseline offers nightly dinner cruises departing from several cities on the East Coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $50 per passenger. Excel Cruiseline's variable cost of providing the dinner is $20 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $270,000 per month. Under these conditions, the breakeven point in tickets is 9,000 and the breakeven point in sales dollars is $450,000. 2. Suppose Excel Cruiseline cuts its dinner cruise ticket price from $50 to $40 to increase the number of passengers. Compute the new breakeven point in units and in sales dollars. Explain how changes in sales price generally affect the breakeven point. Assume that Excel Cruiseline does not cut the price. Excel Cruiseline could reduce its variable costs by no longe serving an appetizer before dinner. Suppose this operating change reduces the variable expense from $20 to $10 per passenger. Compute the new breakeven point in units and in dollars. Explain how changes in variable costs generally affect the breakeven point. 1. Suppose Excel Cruiseline cuts its dinner cruise ticket price from $50 to $40 to increase the number of passengers. Compute the new breakeven point in units and in sales dollars. Explain how changes in sales price generally affect the breakeven point. Begin with the breakeven point in units. Enter the formula, then compute the breakeven point. (Round your final answers up to the nearest whole number. For amounts with a $0 balance, make sure to enter "0" in the appropriate input field.) ( Fixed expenses Operating income ) Contribution margin per unit = Breakeven units ( $ 270,000 0 ) 13,500 + + $ $ 20 = Now compute the breakeven point in sales dollars. Enter the formula, then compute the breakeven sales. (Enter the contribution margin ratio as a whole percent. For amounts with a $0 balance, make sure to enter "0" in the appropriate input field.) Fixed expenses Operating income ) + Contribution margin ratio ( ( $ Breakeven sales $ 540,000 270,000 0 ) + 50 % = All else being constant, a decrease in sales price will decrease the contribution margin per unit and contribution margin ratio. The breakeven point will therefore increase All else being constant, a decrease in sales price will decrease the contribution margin per unit and contribution margin ratio. The breakeven point will therefore increase 2. Assume that Excel Cruiseline does not cut the price. Excel Cruiseline could reduce its variable costs by no longer serving an appetizer before dinner. Suppose this operating change reduces the variable expense from $20 to $1 passenger. Compute the new breakeven point in units and in dollars. Explain how changes in variable costs generally affect the breakeven point. Let's begin with the breakeven point units. Enter the formula, then compute the breakeven point in units. (Round your final answers up to the nearest whole number. For amounts with a $0 balance, make sure to enter "0" in the app field.) ( Operating income Fixed expenses ) + Contribution margin per unit = Breakeven units 270000 0 $ 40 Choose from any list or enter any number in the input fields and then click Check Answer. 2 parts Clear All Final Check remaining
