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. The breakeven sales are 10,500 tickets sold. a. Compute the operating leverage factor when FunTime 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? a. Compute the operating leverage factor when FunTime Cruiseline sells 12,000 dinner cruises. (Round your answer to one decimal place.) First, identify the formula, then compute the operating leverage factor. Contribution margin / Operating income = Operating leverage factor $ 240,000 $ 30,000 8.0 b. If volume increases by 6%, by what percentage will operating income increase? (Round the percentage to the nearest whole percent.) The percentage that operating income will increase is %.
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