Question

Live It 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. Live It 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 15,000 monthly passengers Compute the number of dinner Cruise tickets Live It Cruiseline must sell to breakeven and the sales dollars needed to breakeven. 1) • Breakeven units Compute the sales dollars needed to breakeven. Use the shortcut unit contribution margin ratio approach First, identify the formula, then compute the breakeven sales in dollars. (Complete all answer boxes. For amounts with a $0 balance, make sure to enter "0" in the appropriate col. Enter the contribution margin ratio as a whole percent.) Breakeven sales

Answer 1

Contribution margin = Selling price - Variable cost  = 50-20 = $30 per unit

Contribution margin ratio = 30/50 = 60%

1. Breakeven units = Fixed cost / Contributon margin

= $270000/30

= 9000 units

2. Breakeven units = Fixed cost / Contributon margin ratio

= 270000 / 0.60

= $450000