Ocean Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets 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 comma 000 per month. The company's relevant range extends to 16 comma 000 monthly passengers. Compute the number of dinner cruise tickets Ocean Cruiseline must sell to breakeven and the sales dollars needed to breakeven.

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letmeanswer letmeanswer · Answer 1 · 2020-03-23T15:11:42+01:00

Solution:

a. Sales price per passenger - variable cost per passenger= CMPP

= 50-20= 30

b. contribution margin per passenger/ sales price per passenger= CMR

= 20/50= 40%

c. Total contribution margin= contribution per passenger * passengers.

= 20*14,000= 280,000

TCM - fixed expense= operating income

280,000 -210,000= 70,000

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