Question

FunTime Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States includingâ Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $ 50 per passenger. FunTime âCruiseline's variable cost of providing the dinner is $ 30 perâ passenger, and the fixed cost of operating the vesselsâ (depreciation, salaries, dockingâ fees, and otherâ expenses) is $ 210,000 per month. Theâ company's relevant range extends to 20,000 monthly passengers.

If FunTime Cruiseline has a target operating income of $30,000 per month, how many dinner cruise tickets must the company sell?

Answer 1

Answer:Fun Time Cruiseline must sell 12000 dinner cruise tickets

Step-by-step explanation:

Budgeting is an important aspect of the business because it allows a business to assess how much units will need to be sold to reach certain targets, to Break-even etc. Budgeting helps business assess which costs that needs to be managed and how much units needs to be produced and sold. Planning Production schedules and required sales gives a business an opportunity to do a feasibility study to determine if it will be possible for the business to meet targeted out comes.

Budgeting gives a business a benchmark standard for which they can measure actual production, Sales or profits against in order to determine the success or failure of the business. When the business a target profit, Required sales can be calculated which will help the business because as time goes we can constantly measure sales against Targeted sales (Required sales to meet target profits) to determine How far or how close we are in meeting our target profits

The number of dinner tickets required(Targeted Units) to reach a target profit of $30 000 is calculated by taking The sum of fixed cost and Target Profit divide by contribution Margin. Contribution Margin is the difference between Selling price and Variable Cost.

Selling Price = $50

Variable Cost per unit = $30

Fixed Costs = $210 000

Target Profit = $30 000

Targeted Units = (Fixed Cost + Target Profit)/(Selling Price - Variable costs)

Targeted Units = ($210 000 + $30 000)/($50 - $30)

Targeted Units = $240 000/$20

Targeted Units = 12000.

Fun Time Cruiseline must sell 12000 dinner cruise tickets in order to reach a target profit of $30 000

Answer 2

Total tickets that will project the operating income Funtime desires is:

10,500 + 1,500 = 12,000 tickets monthly

Step-by-step explanation:

Funtime cruiseline

Ticket prices per passenger = $50

Variable cost Per passenger = $30

Therefore Contribution per passenger = $50 minus $30 = $20

With a Fixed cost of $210,000 per month, Funtime cruise line will require $210,000 divided by $20 tickets to break even = 10,500 tickets.

If Funtime is required to end with an operating income of $30,000; it will be required to sell an additional sets of tickets equalling $30,000 divided by $20 = 1,500 tickets.

So total tickets that will project the operating income Funtime desires is:

10,500 + 1,500 = 12,000 tickets monthly