Flow Cruiseline offers nightly dinner cruises off the coast of Miami, San Francisco, and Seattle. Dinner cruise tickets sell for $50 per passenger. Flow 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 $270,000 per month. The company's relevant range extends to 16,000 monthly passengers. Use this information to compute the following:
a. What is the contribution margin per passenger?
b. What is the contribution margin ratio?
c. Use the unit contribution margin to project operating income if monthly sales total 13,000 passengers.
d. Use the contribution margin ratio to project operating income if monthly sales revenue totals $520,000.
a. What is the contribution margin per passenger?
First identify the formula, then compute the contribution margin per passenger.