Use the information from the Crystal Cruiseline Data Set.
1. Suppose Crystal Cruiseline cuts its dinner cruise ticket price from $ 50 to $ 40 to in-crease the number of passengers. Compute the new breakeven point in units and in sales dollars. Explain how changes in sales price generally affect the breakeven point.
2. Assume that Crystal Cruiseline does not cut the price. Crystal Cruiseline could reduce its variable costs by no longer serving an appetizer before dinner. Suppose this operating change reduces the variable expense from $ 20 to $ 10 per passenger. Compute the new breakeven point in units and in dollars. Explain how changes in variable costs generally affect the breakeven point.
Crystal Cruiseline Data
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, and 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.