Use the information from the Luxury Cruiseline Data Set. Suppose Luxury Cruiseline embarks on a cost-reduction drive and slashes fixed expenses from $270,000 per month to $180,000 per month.

1. Compute the new breakeven point in units and in sales dollars.

2. Is the breakeven point higher or lower than in S7-3? Explain how changes in fixed costs generally affect the breakeven point.

Luxury Cruiseline offers nightly dinner cruises off the coast of Miami, San Francisco, and Seattle. Dinner cruise tickets sell for $120 per passenger. Luxury Cruiseline's variable cost of providing the dinner is $48 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $270,000 per month. The company's relevant range extends to 15,000 monthly passengers.