Super Cruiseline offers nightly dinner cruises off the coast of Nanaimo and Vict

Question

Super Cruiseline offers nightly dinner cruises off the coast of Nanaimo and Victoria. Dinner cruise tickets sell for $50 per passenger. Super Cruiseline's variable cost of providing the dinner is $10 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $280,000 per month. The company's relevant range extends to 24,000 monthly passengers. If Super Cruiseline has a target operating income of $60,000 per month, how many dinner cruise tickets must the company sell?

Explanation / Answer

Contribution margin=Sales-Variable costs

=(50-10)=$40/passenger

Target Contribution margin=Fixed costs+Target operating income

=(280,000+60,000)=$340,000

Hence dinner cuisne tickets to be sold=(340000/40)

=8500

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.