Suppose Ocean Cruiselines decides to offer two types of dinner cruises: Regular cruises and Executive cruises.The Executive cruise includes complimentary cocktails and five course dinner on the upper deck. Assume that fixed expenses remain at $270,000 per month and that the following tickets prices and variable expense
apply.
Cruise Exec
Sale price per ticket $ 50 $100
Variable expense per person $20 $40
Ocean Cruiselines expects to sell four regular cruises for every one executive cruise. In this one the weighted average contribution margin is $36.00.
A. Compute the total number of dinner cruise that Ocean Cruiselines must sell to break even.
Formula: fixed expenses + operating expenses /
weighted average per unit.
B. Compute the number of regular cruises and executive cruises that Ocean Cruislines must sell to break even.