Question

Cruiseline offers nightly dinner cruises off the coast of​ Miami, San​ Francisco, and Seattle. Dinner cruise tickets sell for $ 50 per passenger. Super ​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 comma 000 per month. The​ company's relevant range extends to 18 comma 000 monthly passengers. Use this information to compute the​ following: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 13, 000 passengers. d. Use the contribution margin ratio to project operating income if monthly sales revenue totals $520, 000. a. What is the contribution margin per passenger? First identify the formula, then compute the contribution margin per passenger.________ _ __________ =contribution margin per passenger________ _ __________ = _________________________

Answer 1

Answer:

a. Contribution margin per passenger ($50-$20) = $30

b. Contribution margin ratio (30/50) = 60%

c. Operating Income  (390000-270000) = $120,000

d. Operating Profit = $42,000

Explanation:

a. Contribution formula = Sale - Variable Cost

Sale price per passenger = $50

Variable Cost per passenger = $20

Contribution margin per passenger ($50-$20)  = $30

b. Contribution Margin ratio formula = Contribution/Sale

Sales per passenger = 50

Contribution per passenger = 30

Contribution margin ratio (30/50) = 60%

c. Operating profit = Contribution margin- Fixed Cost

Monthly sale total for 13000 passenger

Sale per passenger = $50

Total sale for 13000 passenger 13000*50 = $650,000

Contribution Margin per passenger =$30

Total Contribution margin for 13000 passenger = 13000*30 =                                    $390,000

Less: Fixed Cost = 270,000

Operating Income  (390000-270000) = $120,000

d. Contribution margin formula= (Sale x Contribution margin ratio)

Contribution margin = (520000*60%) = $312,000

Less: Fixed Cost = 270,000

Operating Profit = $42,000

Answer 2

Answer:

A) $30

B) 0.6

C) $180,000

D) $102,000

Explanation:

Contribution per unit (in this case, passangers)

Sales revenue - Variable Cost

50 - 20 = 30

Contribution Ratio:

$\frac{Contribution \: Margin}{Sales \: Revenue} = Contribution \: Margin \: Ratio$

$\frac{30}{50} = Contribution \: Margin \: Ratio$

CMR = 0.60 for each dollar 60 cents are left to afford fixed cost and make a gain.

Operating profit with 13,000 passangers we multiply by the contribution per passanger and subtract the fixed cost

13,000 passangers x 30 contribution each - 210,000 fixed cost:

390,000 - 210,000 = 180,000

If sales are 520,000: we multiply this by the contribution margin ratio and subtract the fixed cost

520,000 x 0.60 CMR - 210,000 fixed cost

312,000 - 210,000 = 102,000