Question

Exercise 19-4 (Part Level Submission) Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfi's base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent month's activity in the form of a cost-volume-profit income statement. $64,000 $25,200 800 1,800 1,000 Fare revenues (400 passenger flights) Variable costs Fuel Snacks and drinks Landing fees Supplies and forms Contribution margin Fixed costs Depreciation Salaries Advertising Airport hanger fees 28,800 35,200 3,100 12,940 300 1,700 18,040 $17,160 Net income (a1) Your answer is correct. Calculate the break-even point in dollars. Break-even point 32800

Answer 1

a1)
Total Fixed Costs (a)	$18,040
Contribution Margin Ratio ($35,200/$64,000) (b)	0.55
Break-even point in dollars (a / b)	$32,800
a2)
Total Fixed Costs (a)	$18,040
Contribution Margin per unit ($35,200/400 passengers) (b)	$88
Break-even point in units (a / b)	205
b)
Break-even point in units (a)	205
Contribution Margin per unit ($35,200/400 passengers) (b)	$88
Contribution Margin at Break-even point	$18,040
c)
Revised selling price per unit ($64,000/400 = $160 - 10% of $160) (a)	$144
Number of Passengers (400 + 25% of 400) (b)	500
Revised Sales Revenue (a * b)	$72,000
Less: Variable Costs ($28,800/400 = $72 * 500 passengers)	($36,000)
Revised Contribution Margin	$36,000
Less: Fixed Costs	($18,040)
Revised Net Income	$17,960
The net income is Increased from $17,160 to $17,960.