Use the information from the Fun Time Cruiseline Data Set to compute the following: a. What is
Question:
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 17,000 passengers.
d. Use the contribution margin ratio to project operating income if monthly sales revenue totals $595,000.
Fun Time Cruiseline Data Set
FunTime Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $50 per passenger. FunTime Cruiseline's variable cost of providing the dinner is $30 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 20,000 monthly passengers.
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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a Sales price per passenger 50 Less Variable cost per passenger 30 Contribution margi...View the full answer
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