1. What is the minimal figure of riders Health Cruises must subscribe up by November 20th to interrupt even? *Fixed costs = $ 220. 000 ( Ship rental and crew ) + $ 65. 000 ( initial advertizement disbursal ) + $ 10. 000 ( administrative disbursal ) = $ 295000 *Contribution per unit = $ 1500 – $ 200 = $ 1300 *Breakeven point ( in units ) = 295000/1300 = 226. 92
: At least 227 riders should subscribe up for Health Cruises by November 20th.
2. Should Health Cruises go in front with the sail since 200 people have signed up by November 14th? Why or why non? : Though I concede that Health Cruises do non make the break-even point and is really likely to do loss at this state of affairs. I suggest them to maintain running this trip from a long term position. The company should non see merely fiscal issue in operating concern and lose an chance to do immense net incomes and make new spectrum of service. If Health Cruise expeditiously proceed this trip and offer all right quality of service to these 200 riders. this bundle cruises would travel celebrated through word of oral cavity and addition effectual advertisement consequence. Besides. the company can break understand the operating system of its merchandise and retrace its concern and fiscal system to do net income. Therefore. alternatively of losing tremendous sum of fixed costs by call offing this whole sail. I believe Health Cruises should show its merchandise regardless of its current fiscal position.
3. The advertisement bureau has proposed two alternate runs to assist make full the boat. One will be $ 6000 and the other would be $ 15. 000. Which would you propose? *Breakeven point including = 295000+6000/1300 = 232
another ads cost $ 6. 000 ( in units )
* Breakeven point including = 295000+15000/1300 = 239
another ads cost $ 15. 000 ( in units )
: I suggest the corporation to take the run that costs $ 15. 000 since. as computation shown above proves. it has higher possibility of conveying adequate figure of riders to transcend breakeven point in units and earn net income. 4. Should Health Cruises see cutting its monetary values for this trip? Why or why non? What other factors could impact the go/no-go determination in add-on to the interruption even?
: The corporation should non cut its monetary value for this trip because sing the fixed and variable costs its current monetary value which ranges from $ 1500 to $ 2200 seems sensible and at this point where this trip is the first merchandise presenting and merely 200 riders signed up for it. we can non vouch that adequate figure of riders would come to do net income even if we drop the monetary value. Furthermore. Health sails should see other internal and external factors to do this trip successful such as other ways to cut down its fixed and variable cost. its competitors’ monetary values and merchandises and nation’s economic position.