Question

Score: 0 of 3 pts 2 of 15 (0 complete) HW Score: 0%, 0 of 72 pts S7-2 (similar to) Question Help O 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 $80 per passenger. Ocean Cruiseline's variable cost of providing the dinner is $40 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $360,000 per month. The company's relevant range extends to 19,000 monthly passengers. If Ocean Cruiseline sells an additional 500 tickets, by what amount will its operating income increase (or operating loss decrease)? First, identify the formula, then compute the operating income increase (or operating loss decrease). = Operating

Answer 1

Answer :- Computation of the operating income increase(or operating loss decrease) :-

Contribution Margin per passenger × additional tickets sold = Operating Income

$40 × 500 = $20,000

working note :-

Contribution margin = Sales - Variable cost

Contribution Margin = $80 - $40

Contribution Margin = $40

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