Break-even number of passengers for a cruiseOcean Escape Cruise Lines has a boat with a capacity of 1,200passengers. An eight-day ocean cruise involves the following costs: CrewFuelFixed operating costs $240,00060,000800,000 The variable costs per passenger for the eight-day cruise include thefollowing: MealsVariable operating costs $900400 The price of the cruise is $2,400 per passenger.A. Determine the break-even number of passengers for the eight- day cruise.B. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise?C. Assume the cruise was booked to capacity. What would be theprofit or loss for the cruise?D. If the cruise cannot book enough passengers to break even, howmight the cruise line respond?
Break-even number of passengers for a cruiseOcean Escape Cruise Lines has a boat with a capacity of 1,200passengers. An eight-day ocean cruise involves the following costs: CrewFuelFixed operating costs $240,00060,000800,000 The variable costs per passenger for the eight-day cruise include thefollowing: MealsVariable operating costs $900400 The price of the cruise is $2,400 per passenger.A. Determine the break-even number of passengers for the eight- day cruise.B. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise?C. Assume the cruise was booked to capacity. What would be theprofit or loss for the cruise?D. If the cruise cannot book enough passengers to break even, howmight the cruise line respond?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Break-even number of passengers for a cruise
Ocean Escape Cruise Lines has a boat with a capacity of 1,200
passengers. An eight-day ocean cruise involves the following costs:
| Crew Fuel Fixed operating costs |
$240,000 60,000 800,000 |
The variable costs per passenger for the eight-day cruise include the
following:
| Meals Variable operating costs |
$900 400 |
The price of the cruise is $2,400 per passenger.
A. Determine the break-even number of passengers for the eight-
day cruise.
B. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise?
C. Assume the cruise was booked to capacity. What would be the
profit or loss for the cruise?
D. If the cruise cannot book enough passengers to break even, how
might the cruise line respond?
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