Problem
Royal Hellenic Cruiseline offers nightly dinner cruises off the coast of Nanaimo and Victoria. Dinner cruise tickets sell for $70 per passenger. Royal Hellenic Cruiseline's variable cost of providing the dinner is $30 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $200,000 per month. The company's relevant range extends to 15,000 monthly passengers.
Use the information from the Royal Hellenic Cruiseline data to answer the following questions:
1. Suppose Royal Hellenic Cruiseline cuts its dinner cruise ticket price from $70 to $50 to increase the number of passengers. How many tickets needs to be sold to break-even?
2. Assume that Royal Hellenic Cruiseline does not cut the price. Royal Hellenic Cruiseline could reduce its variable costs by no longer serving an appetizer before dinner. Suppose this operating change reduces the variable expense from $30 to $20 per passenger. How many tickets needs to be sold to break-even?