Question

Super 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 $80 per passenger. Super Cruiseline's variable cost of providing the dinner is S40 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 13,000 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 10,000 passengers. d. Use the contribution margin ratio to project operating income if monthly sales revenue totals $515,000 a. What is the contribution margin per passenger? First identify the formula, then compute the contribution margin per passenger Contribution margin per passenger b. What is the contribution margin ratio? (Enter the contribution margin ratio as a whole percent) First identity the formula, then compute the contribution margin ratio. -Contribution margin ratio

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

Selling price= $80

Unitary variable cost= $40

Fixed costs= $240,000

Relevant range upper limit= 13,000 passengers

1) Contribution margin= selling price - unitary variable cost

Contribution margin= 80 - 40= $40

2) Contribution margin ratio= contribution margin/ selling price

Contribution margin ratio= 40/80= 0.5

3) Sales= 10,000 passengers

Total contribution margin= 10,000*40= 400,000

Fixed costs= (240,000)

Net income= 160,000

4) Sales= $515,000

Contribution margin= 515,000*0.5= 257,500

Fixed costs= (240,000)

Net income= 17,500