Question: Question 1 As much consideration and your quest to improve the transport in the Caribbean you and some colleagues have decided to lease a vessel

Question 1 As much consideration and your quest
Question 1 As much consideration and your quest to improve the transport in the Caribbean you and some colleagues have decided to lease a vessel to launch an inter-island ferry service. You plan an introductory route from Trinidad to Barbados. Your fixed cost is estimated to $50,000 which related to vessel lease cost and other fixed running cost. You estimate that your variable cost per trip would be $500 per person, and you intend to charge a price of $750 per person. A. B. C. What is the minimum number of tickets you must sell to breakeven? (1 mark) How many tickets must you sell to make an intended profit of $25,000? (1 mark) Sketch a graph showing Total Revenue, Total Cost, Fixed Cost, the breakeven point and the operating profit and loss areas. (2 marks) . The vessel has a capacity for 550 passengers, and you feel it would be good for the image of the service to be running at 90% of capacity. Given the same cost structure what price must you charge to maintain your intended profit level of $25,000 if you are running at 90% capacity? (3 marks) . The government of Barbados is offering a subsidy of $100 per passenger, thus reducing your variable cost, but stipulate that your price be capped as $600. Ata price of $600 you estimate you can sell 350 tickets. Is it financial prudent to accept the subsidy? (2 marks) Question 2

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