Break-even number of passengers for a cruiseOcean Escape Cruise Lines has a boat with a capacity of 1,200passengers. An eight-day ocean cruise involves the following costs: CrewFuelFixed operating costs $240,00060,000800,000 The variable costs per passenger for the eight-day cruise include thefollowing: MealsVariable operating costs $900400 The price of the cruise is $2,400 per passenger.A. Determine the break-even number of passengers for the eight- day cruise.B. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise?C. Assume the cruise was booked to capacity. What would be theprofit or loss for the cruise?D. If the cruise cannot book enough passengers to break even, howmight the cruise line respond?

Break-even number of passengers for a cruiseOcean Escape Cruise Lines has a boat with a capacity of 1,200passengers. An eight-day ocean cruise involves the following costs: CrewFuelFixed operating costs $240,00060,000800,000 The variable costs per passenger for the eight-day cruise include thefollowing: MealsVariable operating costs $900400 The price of the cruise is $2,400 per passenger.A. Determine the break-even number of passengers for the eight- day cruise.B. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise?C. Assume the cruise was booked to capacity. What would be theprofit or loss for the cruise?D. If the cruise cannot book enough passengers to break even, howmight the cruise line respond?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 2MAD

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Break-even number of passengers for a cruise Ocean Escape Cruise Lines has a boat with a capacity of 1,200 passengers. An eight-day ocean cruise involves the following costs: crew $240,000 fuel 60,000 fixed opeating cost 800,000 The variable costs per passenger for the eight-day cruise include the following: meals $900 variable operating cost 400 The price of the cruise is $2,400 per passenger.A. Determine the break-even number of passengers for the eight-day cruise.B. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise?C. Assume the cruise was booked to capacity. What would be the profit or loss for the cruise?D. If the cruise cannot book enough passengers to break even, how might the cruise line respond?
Ocean Escape Cruise Lines has a boat with a capacity of 1,200 passengers. An eight-day ocean cruise involves the following costs: Crew $240,000 Fuel 60,000 Fixed operating costs 800,000 The variable costs per passenger for the eight-day cruise include the following: Meals $900 Variable operating costs 400 The price of the cruise is $2,400 per passenger. a. Determine the break-even number of passengers for the eight-day cruise.passengers b. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise?$ loss c. Assume the cruise was booked to capacity. What would be the profit or loss for the cruise? $ profit d. If the cruise cannot book enough passengers to break even, how might the cruise line respond? All the above.
Analyze Pacific Airways Pacific Airways provides air travel services between Los Angeles and Seattle. Cost information per flight is as follows: Each flight has a capacity of 150 seats, with an average of 125 seats sold per flight at an average ticket price of 180. Assume Pacific Airways is considering a new service that would provide tickets at half price. Passengers would need to fly standby to receive the discount, but would be provided a flight for a given day of travel. An analysis revealed that an average of 8 existing passengers would use the new discounted tickets for travel. In addition, 15 new passengers would be attracted to the offer. a. Determine the contribution margin per passenger for the full-priced ticket. b. Determine the break-even number of seats sold per flight. c. Determine the contribution margin per passenger for discounted tickets. d. Should Pacific Airways offer the discounted ticket plan? Answer the question by computing the incremental contribution margin per flight for the plan.
Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Bolton Air. Jolly's fixed costs are $25,500 per month. Bolton Air charges passengers $1,300 per round-trip ticket. Read the requirement LOADING... . Begin by selecting the formula to calculate the breakeven points. Breakeven number of units = Fixed costs ÷ Contribution margin per unit Next, select the formula to calculate the number of tickets needed to meet the target operating income. Quantity of units required to be sold = ( Fixed costs + Target operating income ) ÷ Contribution margin per unit Now complete the requirement for each of the cases. Begin with case 1. Case 1: Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and…
Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Ottawa Air. Jolly's fixed costs are $28,500 per month. Ottawa Air charges passengers $1,100 per round-trip ticket. Read the requirement. Begin by selecting the formula to calculate the breakeven points. Requirement Breakeven number of units Fixed costs Contribution margin per unit = Calculate the number of tickets Jolly must sell each month to (a) break even and (b) make a target operating income of $13,000 per month in each of the following independent cases. (Round up to the nearest whole number. For example, 10.2 should be rounded up to 11.) Next, select the formula to calculate the number of tickets needed to meet the target operating income. Quantity of units 1. Jolly's variable costs are $36 per ticket. Ottawa Air pays Jolly 6% commission on ticket price. 2. Jolly's variable costs are $28 per ticket. Ottawa Air pays Jolly 6% commission on ticket price. 3. Jolly's variable costs are $28…
Developing an Equation from Average Costs Paradise Pub is a high-end dog hotel located in New York. Assume that in March, when dog-days occupancy was at an annual low of 500 days, the average cost per dog-day was $26. In July, when dog-days were at a capacity level of 4,500, the average cost per dog-day was $10. (a) Develop an equation for monthly operating costs. (Let X = dog-days per month) Total cost = $ -$ *X (b) Determine the average cost per dog-day at an annual volume of 28,000 dog-days. (Round to the nearest cent.) $
Assuming there are two vessels you can choose from to ship containers from the Port of Oakland to Shanghai, China. The cost and price information of these two vessels is given as below. (TEU: Twenty-foot equivalent unit). Vessel Name Fixed cost (\($) Variable cost per Price per TEU (1)$) TEU ($$$) Sea-land Eagle 1,000 2 3 A.P. Moller 4,000 1 3 Answer the next five questions based on the above information. Which vessel would you choose if there were 2000 TEUS to ship? Select one: O a. Sea-land Eagle О Б.А.Р. Мoller O c. No preference. Which vessel would you choose if there were 3000 TEUS to ship? Select one: a. Sea-land Eagle О Б.А.Р. Мoller O c. No preference.
Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Ottawa Air. Jolly's fixed costs are $28,500 per month. Ottawa Air charges passengers $1,100 per round-trip ticket. Read the requirement. Begin by selecting the formula to calculate the breakeven points. Breakeven number of units Fixed costs Contribution margin per unit = Next, select the formula to calculate the number of tickets needed to meet the target operating income. Quantity of units required to be sold = ( Fixed costs Target operating income ) ÷ Contribution margin per unit + Now complete the requirement for each of the cases. Begin with case 1. Case 1: Jolly's variable costs are $36 per ticket. Ottawa Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and tickets to meet the target operating income. Case 2: Jolly's variable costs are $28 per ticket. Ottawa Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and tickets…
Golden Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Vancouver Air. Golden's fixed costs are $25,500 per month. Vancouver Air charges passengers $1,400 per round-trip ticket. Read the requirement. Begin by selecting the formula to calculate the breakeven points. Breakeven Requirement number of units Fixed costs Contribution margin per unit Next, select the formula to calculate the number of tickets needed to meet the target operating income. Calculate the number of tickets Golden must sell each month to (a) break even and (b) make a target operating income of $15,000 per month in each of the following independent cases. (Round up to the nearest whole number. For example, 10.2 should be rounded up to 11.) Quantity of units required to be sold = ( Fixed costs Target operating income ) + Contribution margin per unit + 1. Golden's variable costs are $40 per ticket. Vancouver Air pays Golden 10% commission on ticket price. 2. Golden's variable…
Neptune Rentals operates a boat rental service. Consider the following costs of the company over the rel- evant range of 5,000 to 8,000 hours of operating time for its boats: Total costs: Variable costs Fixed costs. Total costs Cost per hour: Variable cost. Fixed cost. Total cost per hour .... 5,000 $ Hours of Operating Time 6,000 $ 20,000 $ 168,000 $188,000 ? ? ? GA $ 69|| ? $ ? LA ? ? ? $ 7,000 ? 15155 ? C ? $ ? ? $ 69 8,000 Gall $ ~ 2. ? ? Required: Compute the missing amounts, assuming that cost behavior patterns remain unchanged within the relevant range of 5,000 to 8,000 hours.
7. Day Cruising operates a pontoon boat rental business. Assume the boat rent for $30 per 6 hours. The variable costs are $27 per 6 hours rental, and its fixed costs are $90,000 each month. What is the contribution margin ratio?⦁ 100%⦁ 90%⦁ 10%⦁ 3%
Calculating breakeven point for two products Scotty’s Scooters plans to sell a standard scooter for $55 and a chrome scooter for $70. Scotty’s purchases the standard scooter for $30 and the chrome scooter for $40. Scotty’s expects to sell one standard scooter for every three chrome scooters. Scotty’s monthly fixed costs are $23,000. Requirements How many of each type of scooter must Scotty’s Scooters sell each month to break even? How many of each type of scooter must Scotty’s Scooters sell each month to earn $25,300? 3 Suppose Scotty’s expectation to sell one standard scooter for every three chrome scooters was incorrect and for every four scooters sold two are standard scooters and two are chrome scooters. Will the breakeven point of total scooters increase or decrease? Why? (Calculation not required.)