Great Cruiseline offers nightly dinner cruises off the coast of Miami, San Francisco, and Seattle. Dinner cruise tickets sell
for $ 80 per passenger. Excel Cruiseline's variable cost of providing the dinner is $ 40 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 18,000 monthly passengers. The breakeven sales are 9000 tickets sold. Use this information to compute the following:
a. Compute the operating leverage factor when Great Cruiseline sells 12000 dinner cruises.
b. If volume increases by 8%, by what percentage will operating income increase?
c. If volume decreases by 5%, by what percentage will operating income decrease?
a. Compute the operating leverage factor when Great Cruiseline sells 12000 dinner cruises.
b. If volume increases by 8%, by what percentage will operating income increase?
c. If volume decreases by 5%, by what percentage will operating income decrease?
1 answer:
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