Crystal Cruiseline Data Set used for S7-1 through S7-12: Crystal Cruiseline offe

Question

Crystal Cruiseline Data Set used for S7-1 through S7-12: Crystal Cruiseline offers nightly dinner cruises off the coast of Miami, San Francisco, and Seattle. Dinner cruise tickets sell for $50 per passenger. Crystal 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. The company's relevant range extends to 14,000 monthly passengers. S7-1 Compute unit contribution margin and contribution margin ratio (Learning Objective 1) Use the information from the Crystal Cruiseline Data Set 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 11,000 passengers. d. Use the contribution margin ratio to project operating income if monthly sales revenue totals $490,000.

Explanation / Answer

Ans) Crystal Cruiseline Data Set .7=1 Contribution Margin per passenger=Sales Revenue per passenger-Variable cost per passenger a) Sales Revenue $              50.00 Variable cost=(B) $              20.00 Contribution Margin=(A)-(B ) $              30.00 Contribution Margin per passenger= $              30.00 b) Contribution Margin Ratio= (Contribution Margin per passenger/Sales Revenue per passenger)*100 $30/$50)*100 60% c ) Sales (Passengers) 11000 Sales Revenue=(A) $              50.00 Variable cost=(B) $              20.00 Contribution Margin=(A)-(B ) $              30.00 Fixed Cost manufacturing $ 2,10,000.00 Sales(11000*$50) $ 5,50,000.00 Variable Cost=(11000*$20) $ 2,20,000.00 Contribution Margin=($550000-$220000) $ 3,30,000.00 Less: Fixed cost $ 2,10,000.00 Net Income before Interest & Taxes $ 1,20,000.00 d) Operating Income for additional 600 ticket $ 4,90,000.00 Contribution Margin=($490000*60%) $ 2,94,000.00 Fixed Cost manufacturing $ 2,10,000.00 Net Income($294000-$210000) $      84,000.00 .7-2 Operating Income increase/decrease when sales of additional 600 tickets Contribution Margin Per unit=(A) $              30.00 Sales of additional tickets=(B) 600 Increase in operating Income=(A)*(B)=(Sales of additional ticket*contribution margin per passenger) $      18,000.00

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