Break-even number of passengers for a cruise Ocean Escape Cruise Lines has a boat with a capacity of 1,200 passengers. An eight-day ocean cruise involves the following costs: crew $240,000 fuel 60,000 fixed opeating cost 800,000 The variable costs per passenger for the eight-day cruise include the following: meals $900 variable operating cost 400 The price of the cruise is $2,400 per passenger.A. Determine the break-even number of passengers for the eight-day cruise.B. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise?C. Assume the cruise was booked to capacity. What would be the profit or loss for the cruise?D. If the cruise cannot book enough passengers to break even, how might the cruise line respond?
Break-even number of passengers for a cruise Ocean Escape Cruise Lines has a boat with a capacity of 1,200 passengers. An eight-day ocean cruise involves the following costs: crew $240,000 fuel 60,000 fixed opeating cost 800,000 The variable costs per passenger for the eight-day cruise include the following: meals $900 variable operating cost 400 The price of the cruise is $2,400 per passenger.A. Determine the break-even number of passengers for the eight-day cruise.B. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise?C. Assume the cruise was booked to capacity. What would be the profit or loss for the cruise?D. If the cruise cannot book enough passengers to break even, how might the cruise line respond?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2MAD
Related questions
Question
Break-even number of passengers for a cruise Ocean Escape Cruise Lines has a boat with a capacity of 1,200 passengers. An eight-day ocean cruise involves the following costs:
| crew | $240,000 |
| fuel | 60,000 |
| fixed opeating cost | 800,000 |
The variable costs per passenger for the eight-day cruise include the following:
| meals | $900 |
| variable operating cost | 400 |
The price of the cruise is $2,400 per passenger.
A. Determine the break-even number of passengers for the eight-day cruise.
B. Assume 900 passengers booked the cruise. What would be the profit or loss for the cruise?
C. Assume the cruise was booked to capacity. What would be the profit or loss for the cruise?
D. If the cruise cannot book enough passengers to break even, how might the cruise line respond?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning