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, andd 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

7-1

7-10.

Simple contribution margin will be higher than Weighted average because simple consider Regular Cruise and Executive cruise as equal however the passenger in actual are different. Executive cruise alone margin is higher but occupancy is lower than regular cruise but if considered equal the simple average will increase.

Breakeven will increase if the company sells only regular cruise as its contribution margin is lower than executive margin

7-10

Fixed Cost= $210,000

Breakeven= Fixed cost/Weighted Contribution Margin per Pasenger

=210000/42

= 5000

b) Ratio for regular cruise and executive cruise= 80%: 20%

Regular cruise for breakeven= 5000*80%=4000

Executive Cruise for breakeven= 5000*20%= 1000

Sales Price per Passenger $    50.00 Variable cost Per Passenger $    20.00 a Contribution Margin per Passenger $    30.00 b Contribution Margin ratio 60%

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