Question: There are 3 sections to this question please answer all 3 sections: Cruiseline offers nightly dinner cruises off the coast of Miami, San Francisco, and

There are 3 sections to this question please answer all 3 sections:

Cruiseline offers nightly dinner cruises off the coast of Miami, San Francisco, and Seattle. Dinner cruise tickets sell for $80 per passenger. Ocean Cruiseline's variable cost of providing the dinner is $40 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $240,000 per month. The company's relevant range extends to 18,000 monthly passengers. The breakeven sales are 6,000 tickets sold.

a. Compute the operating leverage factor when Ocean Cruiseline sells 8,000 dinner cruises.

b. If volume increases by 9%, by what percentage will operating income increase?

c. If volume decreases by 3%, by what percentage will operating income decrease?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!