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Luxury Cruiseline offers nightly dinner cruises departing from several cities on the eastern...

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Question

Accounting

Luxury
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
$80
per passenger.
Luxury
Cruiseline's variable cost of providing the dinner is
$40
per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is
$240,000
per month. The company's relevant range extends to
16,000
monthly passengers.
Use this information to compute the following:
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
13,000
passengers.
d. Use the contribution margin ratio to project operating income if monthly sales revenue totals
$515,000.
a. What is the contribution margin per passenger?
First identify the formula, then compute the contribution margin per passenger.
Fixed cost per passenger
-
Sales price per passenger
=
Contribution margin per passenger
d
-
d
=
f

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