A) Explanation Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows: Break-even point in Sales ( units ) = Fixed Costs Contribution Margin per unit Determine the break-even point in sales units. Fixed cost =$1,100,000 (refer Table 1) Contribution margin per unit =$1,100 per unit (2) Break-even point in Sales ( units ) = Fixed Costs Contribution Margin per unit = $ 1 , 100 , 000 $ 1 , 100 = 1 , 000 passengers Working note (1): Determine the total fixed cost per cruise and total variable cost per passenger B) To determine Calculate the profit or loss for the cruise if 900 passengers booked the cruise. C) To determine Calculate the profit or loss for the cruise if the cruise was booked to capacity. D) To determine Explain the response of the cruise line if the cruise cannot book enough passengers to break-even.

Bundle: Managerial Accounting, 15th + Cengagenowv2, 1 Term Printed Access Card

15th Edition

ISBN: 9781337955386

Author: Carl Warren, Ph.d. Cma William B. Tayler

Publisher: Cengage Learning

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Question

Chapter 6, Problem 2MAD

To determine

Calculate the break-even number of passengers for the eight-day cruise.

To determine

Calculate the profit or loss for the cruise if 900 passengers booked the cruise.

To determine

Calculate the profit or loss for the cruise if the cruise was booked to capacity.

To determine

Explain the response of the cruise line if the cruise cannot book enough passengers to break-even.

Expert Solution & Answer

Chapter 6 Solutions

Bundle: Managerial Accounting, 15th + Cengagenowv2, 1 Term Printed Access Card

Ch. 6 - Describe how total variable costs and unit...Ch. 6 - Which of the following costs would be classified...Ch. 6 - Describe how total fixed costs and unit fixed...Ch. 6 - Prob. 4DQ Ch. 6 - Prob. 5DQ Ch. 6 - Prob. 6DQ Ch. 6 - Prob. 7DQ Ch. 6 - Prob. 8DQ Ch. 6 - Prob. 9DQ Ch. 6 - What does operating leverage measure, and how is...

Ch. 6 - High-low method The manufacturing costs of...Ch. 6 - Contribution margin Waite Company sells 250,000...Ch. 6 - Prob. 3BE Ch. 6 - Prob. 4BE Ch. 6 - Prob. 5BE Ch. 6 - Operating leverage Haywood Co. reports the...Ch. 6 - Margin of safety Jorgensen Company has sales of...Ch. 6 - Classify Costs Following is a list of various...Ch. 6 - Identify cost graphs The following cost graphs...Ch. 6 - Identify activity bases For a major university,...Ch. 6 - Prob. 4E Ch. 6 - Identify fixed and variable costs Intuit Inc....Ch. 6 - Relevant range and fixed and variable costs Child...Ch. 6 - High-low method Ziegler Inc. has decided to use...Ch. 6 - Prob. 8E Ch. 6 - Contribution margin ratio Young Company budgets...Ch. 6 - Contribution margin and contribution margin ratio...Ch. 6 - Prob. 11E Ch. 6 - Break-even sales Anheuser-Busch InBev SA/NV (BUD)...Ch. 6 - Prob. 13E Ch. 6 - Prob. 14E Ch. 6 - Prob. 15E Ch. 6 - Break-even analysis for a service company3 Sprint...Ch. 6 - Prob. 17E Ch. 6 - Prob. 18E Ch. 6 - Prob. 19E Ch. 6 - Prob. 20E Ch. 6 - Prob. 21E Ch. 6 - Prob. 22E Ch. 6 - Prob. 23E Ch. 6 - Prob. 24E Ch. 6 - Prob. 25E Ch. 6 - Classify costs Seymour Clothing Co. manufactures a...Ch. 6 - Break-even sales under present and proposed...Ch. 6 - Prob. 3PA Ch. 6 - Prob. 4PA Ch. 6 - Prob. 5PA Ch. 6 - Contribution margin, break-even sales,...Ch. 6 - Classify costs Cromwell Furniture Company...Ch. 6 - Prob. 2PB Ch. 6 - Prob. 3PB Ch. 6 - Prob. 4PB Ch. 6 - Prob. 5PB Ch. 6 - Contribution margin, break-even sales,...Ch. 6 - Analyze Global Airs cost-volume-profit...Ch. 6 - Prob. 2MAD Ch. 6 - Prob. 3MAD Ch. 6 - Prob. 4MAD Ch. 6 - Prob. 1TIF Ch. 6 - Prob. 3TIF Ch. 6 - Profitability strategies Somerset Inc. has...Ch. 6 - Prob. 5TIF Ch. 6 - Analysis of costs for a shipping department Sales...Ch. 6 - Taylor Corporation is analyzing the cost behavior...Ch. 6 - Prob. 2CMA Ch. 6 - Bolger and Co. manufactures large gaskets for the...Ch. 6 - Prob. 4CMA

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