Spirit Of New York Cruise line offers nightly dinner cruises departing from Manhattan or Lincoln Harbor, Nj. The dinner cruise tickets sell for $120 per passenger. Spirit of New York Cruise line's variable cost providing dinner is $75 per passenger, and the fixed cost of operating the veesels (depreciation, salaries, docking fees, and other expenses) is $1,125,000 per month. The company's relevant range extends to 25,000 montly passengers. a. What is the contribution per unit b. What is the profit if quantity sold totals 28,500 dinner cruise tickets.
Spirit Of New York Cruise line offers nightly dinner cruises departing from Manhattan or Lincoln Harbor, Nj. The dinner cruise tickets sell for $120 per passenger. Spirit of New York Cruise line's variable cost providing dinner is $75 per passenger, and the fixed cost of operating the veesels (
a. What is the contribution per unit
b. What is the profit if quantity sold totals 28,500 dinner cruise tickets.
The difference between the selling price and the variable cost per unit is the contribution margin per unit. The percentage of sales revenue referred to as "Contribution" goes toward covering fixed costs because it is not used to pay for variable costs.
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