Question

Super Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States introducing Charleston, Baltimore and Alexandria. Dinner cruise tickets sell for $50 per passenger. Super 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 13,000 monthly passengers The breakeven sales are 7,000 tickets sold.
1) Compute the operating leverage factor when Super Cruiseline sells 8,750 dinner cruises.
2) If volume increases by 6%, by what percentage will operate in income increase?
3) If volume decreases by 5%, by what percentage will operating income decrease?

Answer 1

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