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Question - Classy Cruiseline offers nightly dinner cruises departing from several cities on the East Coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell $80 for per passenger. Classy Cruiseline's variable cost of providing the dinner is $40 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $240,000 per month. The company's relevant range extends to 16,0000 monthly passengers. The breakeven sales are 6000 tickets sold.
a. Compute the operating leverage factor when Cruiseline sells 8000 dinner cruises.
b. If volume increases by 9%, by what percentage will operating income increase?
c. If volume decreases by 4%, by what percentage will operating income decrease?
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