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Katen [24]
3 years ago
15

Luxury Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States includin

g​ Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $ 50 per passenger. Luxury ​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 16 comma 000 monthly passengers. If Luxury Cruiseline sells an additional 300 ​tickets, by what amount will its operating income increase​ (or operating loss​ decrease)?
Business
1 answer:
koban [17]3 years ago
4 0

Answer:

Luxury Cruiseline`s operating income will increase by $9,000

Explanation:

<u>Operating Income </u><u><em>Before</em></u><u> Additional 300 tickets</u>

Sales ( $50×16,000)                              800,000

Less Variable Cost ($20×16,000)        (320,000)

Contribution                                           480,000

Less Fixed Costs                                    210,000

Operating Income                                  270,000

<u>Operating Income </u><u><em>After</em></u><u> Additional 300 tickets</u>

Sales ( $50×(16,000+300))                               815,000

Less Variable Cost ($20×(16,000+300))        (326,000)

Contribution                                                      489,000

Less Fixed Costs                                               210,000

Operating Income                                             279,000

<u><em>Effect</em></u><u> of sells an additional 300 ​tickets</u>

Operating Income <em>After</em> Additional 300 tickets     279,000

Operating Income <em>Before</em> Additional 300 tickets  270,000

Change in Operating Income                                       9,000

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