Question

Cramore Carriage Company offers add horsew a ge t h e Charleston South Carolina. The carriage business is h y aged by the clamore Criage Company has the following operating costs during Api Cote konto view the information) During A smoroute pe s o rarmor Carriage Company had 17.700 pages. Servery percenta ges were free 30% were children (18 fore) Requirements 1. Prepare the company's contribuon magne t oforlundures to the newest do 2. Assume that passenger volume increases by 12% in May. Whichures on the income you expect to change and by what percentage would they change? Which figures would rom the same as the more for the month of April. Round l figures to the nearest dolor. De a nd clea r Round in the table to the rest dolar) Requirement 1. Prepare the company's marbecome Cramer Carriage Company Contribution Margin income Sweet For the Month Ended April 10 O tromy uber in the inputs and neck Check Are

Answer 1

Answer with working notes is given below

Req1 $299,720 As per working below Cranmore Carriage Company Contribution Margin Income Statement For the month Ended April 30 Sales Less: Variable Cost Carriage Driver $39,370 Fee paid to Charleston City $29,972 Cost of Souvenir $8,890 Brokerage fees $9,906 Total Variable Cost Contribution Margin Less: Fixed Cost Depreciation on Carriage and stable $2,900 Leasing and boarding horses $51,000 payroll cost of non-tour guide employees $7,950 Marketing, website, telephone & other $7,350 Total Fixed Cost Net Profit (12,700*$3.1) 10% of Sales Revenue (12,700*$0.70) (12,700*60%*$1.3) $88,138 $211,582 $69,200 $142,382 Working notes: Passenger percentage Total passengers Fare per passenger Total Revenue Adults 70% 8,890 $26 $231,140 Children Total 30% 3,810 12,700 $18 $68,580 $299,720 Req2 If passengers volume increases by 12% in May, we would expect the variable expenses to increase 12% this is because variable costs change in direct proportion to changes in volume As a result the variable cost would increase 12% New Variable cost $98,715 Assuming that a 15% increase in volume is still the same relevant range we would expect the fixed costs to remain at their present level