Question

Ocean 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. Ocean 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 $210,000 per month. The company's relevant range extends to 14,000 monthly passengers. If Ocean 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 DI

Answer 1

(	Fixed expenses	+	Operating income	)	/	Contribution margin per passenger	=	Target sales units
(	210000	+	45000	)	/	30	=	8500