The cruise boat can carry up to 45 passengers. The company wants to know the minimum number of passengers needed per cruise to c
over 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?
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.
