Question

Score: 0 of 3 pts 4 of 15 (0 complete) HW Score: 0%, 0 of 72 S7-4 (similar to) Question Help Coast Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $50 per passenger. Coast Cruiseline's variable cost of providing the dinner is $20 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $270,000 per month. The company's relevant range extends to 20,000 monthly passengers. If Coast Cruiseline has a target operating income of $45,000 per month, how many dinner cruise tickets must the company sell? First, identify the formula, then compute the target sales in units. = Target sales units

Answer 1

Solution:

Contribution margin per ticket = Selling price - Variable expenses = $50 - $20 = $30 per ticket

Nos of tickets to be sold to earn target profit = (Fixed costs + Target income) / CM per unit

= ($270,000 + $45,000) / $30 = 10500 units