Question

Blue Seas Cruiseline offers two types of dinner​ cruises: Regular and Executive. The contribution margin per ticket sold is​ $30 for the regular​ cruise, and​ $90 for the executive. Fixed costs are​ $210,000. It expects to sell four regular dinner cruises for every one executive dinner cruise. What is the total number of regular cruises Blue Seas must sell in order to​ breakeven? A. ​1,750 B. ​5,000 C. ​4,000 D. ​1,000

Answer 1

C. ​4,000 regular cruises

Step-by-step explanation:

The Break-even point is where the operating income is zero that is, the firm pay theri variable and fixed cost related to opperations.

`(Fixed\:Cost)/(Contribution \:Margin) = Break\: Even\: Point_(units)`

Where:

`Sales \: Revenue - Variable \: Cost = Contribution \: Margin`

As the company has multple product we must solve for the contribution of the mix:

regular: 30

executive: 90

the ratio of sales is 4:1

Thus 30 x 4/5 + 90 x 1/5 = contribution mix

contribution mix:42

At the current sales ratio we expect to make 42 dollar per seat

Now we calcualte for the BEP of the mix:

`(210,000)/(42) = Break\: Even\: Point_(units)`

BEP 5000

Now, we solve for the ratio of sales wich is 4/5 for regular cruises:

5,000 x 4/5 = 4,000

Answer 2

Answer: A - 1,750

Explanation:From the above question, The contribution margin per ticket sold is​ $30 for the regular​ cruise and​ $90 for the executive. Fixed costs are​ $210,000.

What is the total number of regular cruises Blue Seas must sell in order to​ breakeven?

BEP in units = fixed cost/ contribution margin.

= $210,000/($30 * 4) = 1,750