Use the information from the Fun Time Cruiseline Data Set.
a. Compute the operating leverage factor when Fun Time Cruiseline sells 12,000 dinner cruises.
b. If volume increases by 6%, by what percentage will operating income increase?
c. If volume decreases by 2%, by what percentage will operating income decrease?
Fun Time Cruiseline Data Set
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.