Internet Exercises

www: IE6-30 Estimating Breakeven By accessing Carnival Corporation's web site at www.carnivalcorp.com, you should be able to find enough data to estimate the company's breakeven and other critical items discussed in this chapter. If you have not already done so, complete the internet exercise IE5-27 before proceeding any further. The results of you analysis of IE5-27 will be used in this exercise.

The average price per passenger cruise-day for Carnival Corporation can be computed by dividing the company's total revenue for the most current year by the passenger cruise-days. Use your estimates of fixed and variable costs from IE5-27. (Ignore everything in the company's income statement below the line "Operating income before income from affiliated operations.")

1.      Estimate Carnival Corporation's break-even point in the number of passenger cruise-days.

2.      Estimate the company's margin of safety.

3.      Estimate the company's degree of operating leverage.

4.      Estimate by how much the company's operating income before income from affiliated operations would increase if the passenger cruise-days increased by 2%.