age contribution margin (Learning Objective 4) 57-7 decides to offer two types of dinner cruises: regular cruises and executive cruises. The deck. Assume that fixed expenses remain at $210,000 per month and that the following executive cruise includes complimentary cocktails and a five-course dinner on the upper Use the information from the FunTime Cruiseline Data Set. Suppose FunTime Cruiseline ticket prices and variable expenses apply: Regular Cruise Executive Cruise Sales price per ticket $50 $100 Variable expense per passenger $30 $ 40 Assuming that FunTime 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? (A simple average is calculated by adding both contribution margins per passenger together and dividing by two.) Why? Is it higher or lower than the regular cruise contribution margin calculated in S7-1? Why? Will this new sales mix cause FunTime Cruiseline's breakeven point to increase or decrease from what it was when it sold only regular cruises? 57-8 Continuation of S7-7: Breakeven (Learning Objective 4) Refer to your answer to S7-7. a. Compute the total number of dinner cruises that FunTime Cruiseline must sell to breakeven. b. Compute the number of regular cruises and executive cruises the company must sell to breakeven.
age contribution margin (Learning Objective 4) 57-7 decides to offer two types of dinner cruises: regular cruises and executive cruises. The deck. Assume that fixed expenses remain at $210,000 per month and that the following executive cruise includes complimentary cocktails and a five-course dinner on the upper Use the information from the FunTime Cruiseline Data Set. Suppose FunTime Cruiseline ticket prices and variable expenses apply: Regular Cruise Executive Cruise Sales price per ticket $50 $100 Variable expense per passenger $30 $ 40 Assuming that FunTime 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? (A simple average is calculated by adding both contribution margins per passenger together and dividing by two.) Why? Is it higher or lower than the regular cruise contribution margin calculated in S7-1? Why? Will this new sales mix cause FunTime Cruiseline's breakeven point to increase or decrease from what it was when it sold only regular cruises? 57-8 Continuation of S7-7: Breakeven (Learning Objective 4) Refer to your answer to S7-7. a. Compute the total number of dinner cruises that FunTime Cruiseline must sell to breakeven. b. Compute the number of regular cruises and executive cruises the company must sell to breakeven.
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Transcribed Image Text:FunTime Cruiseline offers nightly dinner cruises departing from several cities on the east-
ern coast of the United States including Charleston, Baltimore, and Alexandria. Dinner
cruise tickets sell for $50 per passenger. FunTime Cruiseline's variable cost of providing
the dinner is $30 per passenger, and the fixed cost of operating the vessels (depreciation,
salaries, docking fees, and other expenses) is $210,000 per month. The company's rel-
evant range extends to 20,000 monthly passengers.
Transcribed Image Text:age contribution margin (Learning Objective 4)
57-7
deck. Assume that fixed expenses remain at $210,000 per month and that the following
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
Use the information from the FunTime Cruiseline Data Set. Suppose FunTime Cruiseline
ticket prices and variable expenses apply:
Regular Cruise Executive Cruise
Sales price per ticket
$50
$100
Variable expense per passenger
$30
$ 40
Assuming that FunTime 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? (A simple average is calculated by adding
both contribution margins per passenger together and dividing by two.) Why? Is it higher
or lower than the regular cruise contribution margin calculated in S7-1? Why? Will this
new sales mix cause FunTime Cruiseline's breakeven point to increase or decrease from
what it was when it sold only regular cruises?
57-8 Continuation of S7-7: Breakeven (Learning Objective 4)
Refer to your answer to S7-7.
a. Compute the total number of dinner cruises that FunTime Cruiseline must sell to
breakeven.
b. Compute the number of regular cruises and executive cruises the company must sell
to breakeven.
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