Compute weighted-average contribution margin (Learning Objective 4)

Use the information from the Bay Cruiseline Data Set. Suppose Bay Cruiseline decides to offer two types of dinner cruises: regular cruises and executive cruises. The execu¬ tive cruise includes complimentary cocktails and a five-course dinner on the upper deck. Assume that fixed expenses remain at $275,000 per month and that the follow¬ ing ticket prices and variable expenses apply:

Assuming that Bay Cruiseline expects to sell seven regular cruises for every one executive cruise, compute the weighted-average contribution margin per unit. Is it higher or lower than a simple average contribution margin? Why? Is it higher or lower than the regular cruise contribution margin calculated in S7-1? Why? Will this new sales mix cause Bay Cruiseline’s breakeven point to increase or decrease from what it was when it sold only regular cruises?

Regular Cruise Executive Cruise $60 $120 40. Sales price per ticket............ Variable expense per passenger.. 20