How Much Revenue Would Health Cruises Receive From Each Customer?
1. What is the minimum number of passengers Health Cruises must sign up by November 20th to break even? [show your Break Even calculations]
2. Should Health Cruises go ahead with the cruise since 200 people have signed up by November 14th? Why or why not?
3. The advertising agency has proposed two alternative campaigns to help fill the boat. One will cost $60,000 and the other would cost $150,000. Which would you suggest? [again, show your Break Even calculations].
4. Should Health Cruises consider cutting its prices for new last-minute customers of this trip? Why or why not? What other factors could impact the go/no-go decision in addition to the break even?
5. Starting with the next cruise, Health Cruises has been approached by the On-a-Whim Agency to act as a travel agent and representative in booking the Health Cruise. On-a-Whim requires a 20% gross margin and Health Cruises fixed costs will remain the same due to on-going expenses and advertising.
a. How much revenue would Health Cruises receive from each customer?
[Hint – You must factor in the On-a-Whim margin.]
b. What is the new break-even [show your Break Even calculations]?
c. Would you recommend that Health Cruises hire On-a-Whim and why or why not?
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