1. Royal Hellenic Cruiseline offers nightly dinner cruises off the coast of Nanaimo and Victoria. Dinner cruise tickets sell for $60 per passenger. Royal Hellenic 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 15,000 monthly passengers.

1. What is the contribution margin per passenger?
2. b What is the contribution margin ratio?
3. c Use the unit contribution margin to project operating income if monthly sales total 10,000 passengers.
4. d Use the contribution margin ratio to project operating income if monthly sales revenue totals $500,000.
5. e Compute the operating leverage factor when Royal Hellenic Cruiseline sells 12,000 dinner cruises.
6. f If volume increases by 10%, by what percentage will operate income increase?
7. g If volume decreases by 5%, by what percentage will operate income decrease?

Answer rating: 100% (QA)

A Contribution margin per passenger Selling price 60 20 40 Contribution margin ratio Contributi... View the full answer