Question

The cruise boat can carry up to 45 passengers. The company wants to know the minimum number of passengers needed per cruise to cover its costs. This number is called the break-even point. A formula for calculating the break-even point is: Break-even point = (fixed costs) ÷ (income per passenger – costs per passenger) The company collects the following data:

Fixed cost (per cruise)
CREW SALARY $350
FUEL $120
OVERHEADS $170

Varible costs( per passenger)
REFRESHMENTS $6.50
REFUND $3.64

SALES INCOME (PER PASSENGER)
AVERAGE TICKET INCOME $36.40

Based on this data, what is the minimum number of passengers needed per cruise, so that the cruise company can be sure it will make a profit?

Answer 1

Fixed costs:
$350 + $120 + $170 = $640
Variable costs:
x * ( $6.50 + $3.64 ) = x * 10.14
Sales income ( total ):
x * $36.40
FC + FV - Income = 0
640 + 10.14 x - 36.40 x = 0
640 - 26.26 x = 0
26.26 x = 640
x = 640 : 26.26 = 24.37
Answer:
The minimum number of passengers needed per cruise, so that the cruise company can be sure it will make a profit is 25.