Question

CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 19-04 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. $48,000 $17,320 700 1,900 1,200 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 Net Income 21,120 26,880 3,100 13,280 600 1,500 18.480 $8.400

Answer 1

1. Break even point ( $) = Fixed cost ÷ profit volume ratio

Fixed costs :

depreciation = $ 3100

Salaries = $ 13280

Advertising = $ 600

Airport hanger fee = $ 1500

--------------

$ 18480

Profit volume ratio (℅) = contribution ÷ sales(fair revenue)

= $ 26880 ÷ $ 48000

= 0.56 or 56℅

Break even point = $ 18480 ÷ 0.56 = $ 10,348.8

2. Break even point ( in passenger flights)

Break even point in dollars ÷ no. Of passengers

= $ 10,348.8 ÷ 400 = $ 25.872

3. Contributions margin at break even point ;(%)

Break even point ÷ contribution × 100

= $ 10,348.8 ÷ $ 26,880 ×100 = 38.5℅

  

__________×__________

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