Directions: Read the Health Cruises case [in the Course Documents folder] and answer the following questions:
1. What is the minimum number of passengers Health Cruises must sign up by November 20th to break even? [show your calculations]
|Initial Advertising Cost |65,000 | |Administrative Expenses |10,000 | |Ship Rental and Crew |220,000 | |Amount of passengers |200 | |Cost per passenger |200 | |Cost for passengers @200 |40,000 | |Total Cost |335,000 | |Average cost per voyage |1,500 | |Tickets to Break Even | 223 |
2. Should Health Cruises go ahead with the cruise since 200 people have signed up by November 14th? Why or why not?
|Total Revenue @200 | 300,000 | |Total Cost |335,000 | |Profit | (35,000) |
No, Health Cruises should not go ahead with the cruise since they would be loosing 35,000 dollars if they do so. They should try one of the other options and if none are possible they should go ahead with the cruise because a 35000 loss is better than a 335,000 one.
3. The advertising agency has proposed two...
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