Atlantis Cruise Lines offers luxury, one-week cruise packages in the Greek Aegean Sea. The ship has a capacity for 1,200 people. Atlantis averages 1,000 passengers per cruise. The price per passenger is $6,000. Costs associated with a cruise are as follows:
|Variable costs per cruise:|
|Crew to serve passengers||$1,200,000|
|Amenity and excursion||400,000|
|Total variable cost per cruise||$3,100,000|
|Fixed costs per cruise:|
|Crew to run ship||$1,500,000|
|Total fixed cost per cruise||$1,670,000|
Atlantis proposes an early booking program to help increase the number of passengers per cruise. Under the proposed early booking program, the first 300 passengers to book a cruise will receive a $1,500 discount off the normal price for the cruise. Atlantis expects this program to increase the number of passengers from 1,000 to 1,180 per cruise. The proposed booking program will be launched with $15,000 of advertising per cruise.
a. Determine the operating income for a cruise.
b. Determine the variable cost per passenger for each variable cost item.
|Crew to serve passengers||$ per passenger|
|Food||$ per passenger|
|Amenity and excursion||$ per passenger|
c. Determine the contribution margin per passenger.
$ per passenger
d1. Prepare a differential analysis showing the differential profit per cruise between the existing plan (Alternative 1) and the proposed early booking program (Alternative 2). If an amount is zero, enter "0".
|Existing Plan (Alt. 1) or Early Booking Program (Alt. 2)|
|Revenues per cruise||$||$||$|
|Variable costs per cruise:|
|Crew to serve passengers||$||$||$|
|Amenity and excursion|
|Total variable costs per cruise||$||$||$|
|Contribution margin per cruise||$||$||$|
d2. Is the new booking program financially acceptable?
Calculate the operating income from cruise for Company ACL
Determine the variable cost per passenger for each variable item of Company ACL
Determine the contribution m...
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