FunTime Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $50 per passenger. FunTime Cruiseline's variable cost of providing the dinner is $30 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $210,000 per month. The 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? First, identify the formula, then compute the target sales in units.

Question

Business

Karsyn

20 March, 14:58

FunTime Cruiseline offers nightly dinner cruises departing from several cities on the eastern coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $50 per passenger. FunTime Cruiseline's variable cost of providing the dinner is $30 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $210,000 per month. The 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? First, identify the formula, then compute the target sales in units.

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Tyson Hooper · Answer 1

the target sales in units is 12,000 dinner cruise tickets

Explanation:

For FunTime Cruiseline to reach its target operating income of $30,000, it must first break - even then make a profit to the extent of $30,000.

This statement is presented in the formula below:

Target Sales - Units = (Fixed Cost + Target Profit) / Contribution per Unit

= ($210,000+$30,000) / ($50 - $30)

= $ 240,000 / $ 20

= 12,000