Ocean 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 s per passenger. Ocean Cruiseline's variable cost of providing the dinner is $20 per passenger, and the foxed cost of operating the vessels (depreciation, salaries, docking fees, and other e $210,000 per month. The company's relevant range extends to 15,000 monthly passengers. The breakeven sales are 7,000 tickets sold. a. Compute the operating leverage factor when Ocean Cruiseline sells 8,750 dinner cruises b. If volume increases by 8%, by what percentage will operating income increase? c. If volume decreases by 3%, by what percentage will operating income decrease? a. Compute the operating leverage factor when Ocean Cruiseline sells 8,750 dinner cruises. (Round your answer to one decimal place.) First, identify the formula, then compute the operating leverage factor. Contribution margin Operating income Operating leverage factor

Ocean 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 s per passenger. Ocean Cruiseline's variable cost of providing the dinner is $20 per passenger, and the foxed cost of operating the vessels (depreciation, salaries, docking fees, and other e $210,000 per month. The company's relevant range extends to 15,000 monthly passengers. The breakeven sales are 7,000 tickets sold. a. Compute the operating leverage factor when Ocean Cruiseline sells 8,750 dinner cruises b. If volume increases by 8%, by what percentage will operating income increase? c. If volume decreases by 3%, by what percentage will operating income decrease? a. Compute the operating leverage factor when Ocean Cruiseline sells 8,750 dinner cruises. (Round your answer to one decimal place.) First, identify the formula, then compute the operating leverage factor. Contribution margin Operating income Operating leverage factor

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Ocean Cruiseline offers nightly dinner cruises departing from several cities on the East Coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise fickets sell for $50
per passenger. Ocean 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
$210,000 per month. The company's relevant range extends to 15,000 monthly passengers. The breakeven sales are 7.000 tickets sold.
a. Compute the operating leverage factor when Ocean Cruiseline sells 8,750 dinner cruises
b. If volume increases by 8%, by what percentage will operating income increase?
c. If volume decreases by 3%, by what percentage will operating income decrease?
a. Compute the operating leverage factor when Ocean Cruiseline sells 8,750 dinner cruises. (Round your answer to one decimal place.)
First, identify the formula, then compute the operating leverage factor.
Contribution margin
Operating incomo
Operating leverage factor

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Step 1: Introduce Marginal Costing & Operating Leverage

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