Question

2015 Royal Kona Tour Information
Tour	Lanai	Villager	Sunset
Price per passenger	$78	$83	$107
Fixed Costs (annual)
boat depreciation	$110,000	$100,000	$100,000
boat maintenance	$42,000	$29,000	$30,000
insurance	$5,400	$5,400	$5,400
share of hotel costs	$21,000	$21,000	$21,000
advertising	$18,000	$18,000	$18,000
Variable Costs (per trip)
fuel	$165	$135	$225
tour guide cost	$175	$100	$160
passenger food	$225	$115	$350
docking fees	$78	$100	-
Number of trips per year	223.0	148.0	210.0
Mean passengers per trip	27.0	26.4	27.6
Annual Profit	$129,849.00	$84,297.60	$291,422.00
Added trip profit	$1,463.00	$1,741.20	$2,218.20
Profit margin added per trip	69%	79%	75%
Return on investment	66%	49%	167%

Q5: As an added complication, the food cost for each trip is being charged so that it is not fixed per trip but will be dependent upon the number of passengers on each trip. In other words, if food for one passenger is ‘x’, food for 2 passengers would be 2x and so on. Which this change (and given that the current price and other fixed costs remain the same), what is the minimum mean number of passengers needed to be profitable in terms of having a positive return on investment? Alternatively, is there a tool you could use for determining the number of passengers needed to make the trip profitable? If so, what tool is that?

Answer 1

	Lanai	Villager	Sunset
Variable Costs (per trip)
fuel	165	135	225
tour guide cost	175	100	160
passenger food	225	115	350
docking fees	78	100	0
Total variable costs per trip	643	450	735
Fixed Costs (annual)
boat depreciation	110000	100000	100000
boat maintenance	42000	29000	30000
insurance	5400	5400	5400
share of hotel costs	21000	21000	21000
advertising	18000	18000	18000
Total fixed costs	196400	173400	174400

Per Trip workings:	Lanai	Villager	Sunset
Price /passenger	78	83	107
Mean passengers per trip	27	26.4	27.6
Price/trip	2106	2191.2	2953.2
Less: Variable costs/trip	643	450	735
Contribution/trip	1463.00	1741.20	2218.20
Fixed costs (as per Table)	196400	173400	174400
Break-even no.of trips=(ie. No-loss ;no-profit )=
Total annual Fixed costs/Contribution per trip
BEP-No.of Trips	134.2	99.6	78.6

Price per passenger	78	83	107
Mean passengers per trip	27	26.4	27.6
Number of trips per year	223	148	210
Total revenue	469638	324297.6	620172
Less: Variable costs	143389	66600	154350
Less: Annual Fixed costs	196400	173400	174400
Annual profit	129849	84297.6	291422
Return on investment(Annual profit/Total fixed costs)	66%	49%	167%

Proceeding on the same lines as above:
For ROI to be positive,
Annual profit should be atleast	0	0	0
1.ie. Revenues should equal var.+fixed costs	339789	240000	328750
2.as total no.of trips is given as	223	148	210
3.& as Price per passenger is given as	78	83	107
Mean passengers per trip=1/(2*3)	19.5	19.5	14.6