Internet Exercises

Carnival Corporation owns and operates a fleet of cruise ships. The company measures its activity in terms of passenger cruise-days. For example, a family of four on a five-day cruise is counted as 20 passenger cruise-days. Many of the expenses of cruise ships (e.g., the costs of food served to passengers) vary with the number of passenger cruise-days. In a press release dated December 21, 2000, the company reported passenger cruise-days of 16,750,000 for fiscal 2000 and 14,947,000 for fiscal 1999.

1. Use the Hoovers Online site at www.hoovers.com to access Carnival Corporation's 2000 financial information and locate its total operating income and revenues for fiscal 2000. (After entering the company name in the site search box at the top of the page and pressing enter, choose the company from the list generated. Then, click on the "Financials" tab and then on "Annual Financials" under the Free Financial Information heading.) Compute Carnival's average sales price per passenger cruise-day by dividing its operating income before income from affiliated companies by its passenger cruise-days.
2. Assume that Carnival's cost fixed costs total approximately $233,130,000 per year. Use the data provided above and gathered to estimate Carnival's break-even point in the number of passenger cruise-days.
3. Again, assume that Carnival's cost fixed costs total approximately $233,130,000 per year. Determine the number of passenger cruise days that Carnival needed in order to generate its total operating income of $965,500,000. (The number should be close to that reported for fiscal 2000)