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Stenback Dry Cleaners has determined the following about its costs: Total variable expenses are $32,000, total fixed expenses are $25,200, and the sales revenue needed to break even is $42,000. Determine the company's current 1) sales revenue and 2) operating income. (Hint: First, find the contribution margin ratio; then prepare the contribution margin income statement.) Use the contribution margin income statement and the shortcut contribution margin approaches to determine Stenback's current (1) sales revenue and (2) operating income. Begin by computing the contribution margin ratio. (Enter the result as a whole number.) The contribution margin ratio is %. Flow 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 sell for $50 per passenger. Flow 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. Under these conditions, the breakeven point in tickets is 7,000 and the breakeven point in sales dollars is $350,000. 1. Suppose Flow Cruiseline cuts its dinner cruise ticket price from $50 to $40 to increase the number of passengers. Compute the new breakeven point in units and in sales dollars. Explain how changes in sales price generally affect the breakeven point. 2. Assume that Flow Cruiseline does not cut the price. Flow Cruiseline could reduce its variable costs by no longer serving an appetizer before dinner. Suppose this operating change reduces the variable expense from $20 to $10 per passenger. Compute the new breakeven point in units and in dollars. Explain how changes in variable costs generally affect the breakeven point. 1. Suppose Flow Cruiseline cuts its dinner cruise ticket price from $50 to $40 to increase the number of passengers. Compute the new breakeven point in units and in sales dollars. Explain how changes in sales price generally affect the breakeven point. Begin with the breakeven point in units. Enter the formula, then compute the breakeven point. (Round your final answers up to the nearest whole number. For amounts with a $0 balance, make sure to enter "0" in the appropriate input field.) 7 + . = Breakeven units + - = Contribution margin per unit Contribution margin ratio Fixed expenses Operating income Units sold Variable expenses

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