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kipiarov [429]
3 years ago
9

Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States including​ Char

leston, Baltimore, and Alexandria. Dinner cruise tickets sell for $ 80 per passenger. Great ​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 12,000 monthly passengers.
If FunTime Cruiseline has a target operating income of $30,000 per month, how many dinner cruise tickets must the company sell? First, identify the formula, then compute the target sales in units.
Business
1 answer:
nlexa [21]3 years ago
4 0

Answer:

6,750 dinner cruise tickets

Explanation:

The computation of the break even point in units is shown below:

= (Fixed expenses + target profit) ÷ (Contribution margin per unit)  

where,  

Contribution margin per unit = Selling price per unit - Variable expense per unit  

So, the contribution margin per unit is

= $80 - $40

= $40

And, the fixed expenses is $240,000

And, the target operating income is $30,000

So, the target sales in units is

= ($240,000 + $30,000) ÷ ($40)

= 6,750 dinner cruise tickets

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<h3>What is crossover point?</h3>

Financial independence is secured when investment income exceeds regular income. In financial jargon, this is known as the "cross over point."

When the production expenses for one product are the same as those for another product, there is an added benefit to selling any product because the cost is the same and the income will be higher from each unit, independent of the number of units sold.

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c. total costs equal total revenues for a process.

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