Live it Cruise line offers nightly dinner cruises off the coast of Miami, San Fr
ID: 2600258 • Letter: L
Question
Live it Cruise line offers nightly dinner cruises off the coast of Miami, San Francisco, and Seattle. Dinner cruise tickets sell for $50per passenger. Live It Cruise line'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 $270,000 per month. The company's relevant range extends to 17,000 monthly passengers. Compute the number of dinner cruise tickets Live It Cruise line must sell to break even and the sales dollars needed to break even. Compute the number of dinner cruise tickets Live It
Cruise line must sell to break even. Use the shortcut unit contribution margin approach.
First, identify the formula, then compute the breakeven sales in units.
(Complete all answer boxes. For amounts with a $0 balance, make sure to enter”0" in the appropriate cell.)
(
+
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=
Breakeven units
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Compute the sales dollars needed to break even. Use the shortcut unit contribution margin ratio approach.
First, identify the formula, then compute the breakeven sales in dollars.
(Complete all answer boxes. For amounts with a $0 balance, make sure to enter "0" in the appropriate cell. Enter the contribution margin ratio as a whole percent.)
(
+
)
/
=
Breakeven sales
(
+
)
/
%
=
(
+
)
/
=
Breakeven units
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)
/
=
Explanation / Answer
(Fixed expenses+Operating income)/Contribution margin per passenger=Breakeven units (270000+0)/30 = 9000 (Fixed expenses+Operating income)/Contribution margin ratio=Breakeven sale (270000+0)/60%= 450000
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