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Compute the new? break-even point in units

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Question - Royal Hellenic Cruiseline offers nightly dinner cruises off the coast of Nanaimo and Victoria. Dinner cruise tickets sell for$60per passenger. Royal Hellenic Cruiseline's variable cost of providing the dinner is $20per? passenger, and the fixed cost of operating the vessels? (depreciation, salaries, docking? fees, and other? expenses) is $210,000 per month. Under these? conditions, the? break-even point in tickets is 5,250 and the? break-even point in sales dollars is ?$315,000. Suppose Royal Hellenic Cruiseline embarks on a? cost-reduction drive and slashes fixed expenses from $210,000 per month to $180,000 per month.

Required -

1. Compute the new? break-even point in units and in sales dollars.

2. Is the? break-even point higher or lower than under the original? conditions? Explain how changes in fixed costs generally affect the? break-even point.

Reference no: EM133116443

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