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##### Problem # 1 Compute unit contribution margin and c...

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Problem # 1 Compute unit contribution margin and contribution margin ratio ****Use the following data for problems 1,2,3,4,9, &10 **** Luxury Cruiseline offers nightly dinner cruises off the coast of Miami, San Francisco, and Seattle. Dinner Cruise tickets sell for \$120 per passenger. Luxury Cruiseline's variable cost of providing the dinner is \$48 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 15,000 monthly passengers. 1. a - What is the contribution margin per passenger? b - What is the contribution margin ratio? c - Use the unit contribution margin to project operating income if monthly sales total 10,000 passengers. d - Use the contribution margin ratio to project operating income if monthly sales revenue totals \$650,000. 2. Project change in income Use the information from the luxury Cruiseline Data Set. If luxury Cruiseline sells and additional 300 tickets, by what amount will its operating income increase (or operating loss decrease)? 3. Find Breakeven Use the information from the Luxury Cruiseline Data Set to compute the number of dinner cruise tickets it must sell to break even and the sales dollars needed to break even. 4. Find target profit volume Use the information from the Luxury Cruiseline Data Set. If Luxury Cruiseline has a target operating income of \$97,200 per month, how many dinner cruise tickets must the company sell? 9. Compute weighted-average contribution margin. Use the information from the Luxury Cruiseline Data Set. Suppose Luxury Cruiseline 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 deck. Assume that fixed expenses remain at \$270,000 per month and that the following ticket prices and variable expenses apply: Regular Cruise Executive Cruise Sales price per ticket ................................................ \$120 \$240 Variable expense per passenger ............................. \$48 \$180 Assuming that Luxury 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? Why? Is it higher or lower than the regular cruise contribution margin calculated Problem #1? Why? Will this new sales mix cause Luxury Cruiseline's breakeven point to increase or decrease from what it was when it sold only regular cruises? 10. Continuation of #9 Breakeven Refer to your answer to # 9. A) Compute the total number of dinner cruises that Luxury Cruiseline must sell to break even. B) Compute the number of regular cruises and executive cruises the company must sell to breakeven.

Paper#8133 | Written in 18-Jul-2015

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