Suppose Flow Cruiselines decides to offer two types of dinner cruise. Regular cruise includes complimentary cocktails and five course dinner on the upper deck assumes that fixed expense remain at $210,000 per month and that the following tickets prices and variable expense apply.
Regular Executive
Sale price per ticket $ 50 $130
Variable expense $ 20 $40
Assuming that Flow Cruiselines expects to sell four regular cruises for every executive cruise, compute the weighted average contribution margin per unit. It is higher or lower than a simple average contribution margin? Why it is higher than the regular cruise contribution margin of $ 30. Why? Will this new sales mix Cruise Flow Cruiselines breakeven point to increase or decrease from what it was when it only sold regular cruises.
Assuming that Flow Cruiselines expect to sell for regular cruises for every one executive cruise, compute the weighted averaged contribution margin per unit. Determine the formula then complete table one section at a time. Round answers to two decimal places.