Atlantis Cruise Lines offers luxury, one-week cruise packages in the Greek Aegean Sea. The ship has a capacity for 1,200 people. Atlantis averages 1,000 passengers per cruise. The price per passenger is $6,000. Costs associated with a cruise are as follows:

Variable costs per cruise:

Crew to serve passengers.................................$1,200,000

Food...........................................................1,500,000

Amenity and excursion.......................................400,000

Total variable cost per cruise.............................$3,100,000

Fixed costs per cruise:

Crew to run ship...........................................$1,500,000

Depreciation expense.........................................120,000

Fuel...............................................................50,000

Total fixed cost per cruise...............................$1,670,000

Atlantis proposes an early booking program to help increase the number of passengers per cruise. Under the proposed early booking program, the first 300 passengers to book a cruise will receive a $1,500 discount off the normal price for the cruise. Atlantis expects this program to increase the number of passengers from 1,000 to 1,180 per cruise. The proposed booking program will be launched with $15,000 of advertising per cruise.

A. Determine the income from operations for a cruise.

B. Determine the variable cost per passenger for each variable cost item.

C. Determine the contribution margin per passenger.

D. Prepare a differential analysis showing the differential income per cruise between the existing plan (Alternative 1) and the proposed early booking program (Alternative 2). Is the new booking program financially acceptable?