Use the information from the Luxury Cruiseline Data Set. Suppose Luxury Cruiseline decides to offer two types of dinner cruises: regular cruises and executive cruises. The executive cruise includes complimentary cocktails and a five-course dinner on the upper deck. Assume that fixed expenses remain at $270,000 per month and that the following ticket prices and variable expenses apply:
Regular Cruise Executive Cruise
Sales price per ticket......................................................$120........................$240
Variable expense per passenger......................................$ 48........................$180
Assuming that Luxury Cruiseline expects to sell four regular cruises for every 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 Luxury Cruiseline's breakeven point to increase or decrease from what it was when it sold only regular cruises?
Luxury Cruiseline offers nightly dinner cruises off the coast of Miami, San Francisco, and Seattle. Dinner cruise tickets sell for $120 per passenger. Luxury Cruiseline's variable cost of providing the dinner is $48 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $270,000 per month. The company's relevant range extends to 15,000 monthly passengers.