Question

Question RESOURCES SP 18 Spencer Kars provides shuttle service between four hotels near a medical center and an international airport. Spencer Kars uses two 10-passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume- profit income statement is shown below. Fare revenues (1,330 fares) 37,240 Variable costs Fuel Tolls and parking Maintenance 5,005 3,078 855 8,938 Contribution margin Fixed costs 28,302 Score A: Salaries 12,100 1,400 1,852 Insurance 15,352 $12,950 Net income Calculate the break-even point in dollars. A: Break-even points Q: Alt the Her A: (1x 3 Calculate the break-even point in number of fares (Round answer to o decimal places, o.g. 5,275.) Break-even point Q: Altex the an Herma Without calculations, determine the contribution margin at the break-even point Contribution margin at the break-even point s A: Answer Search or enter website name 2 3 4 5 6

Answer 1

Number of fares = 1,330
Fare Revenues = $37,240
Variable Costs = $8,938
Fixed Costs = $15,352

Fare Price = $37,240 / 1,330
Fare Price = $28.00

Variable Cost per fare = $8,938 / 1,330
Variable Cost per fare = $6.72

Contribution Margin per fare = Fare Price - Variable Cost per fare
Contribution Margin per fare = $28.00 - $6.72
Contribution Margin per fare = $21.28

Contribution Margin Ratio = Contribution Margin per fare / Fare Price
Contribution Margin Ratio = $21.28 / $28.00
Contribution Margin Ratio = 0.76

Breakeven Point in dollars = Fixed Costs / Contribution Margin Ratio
Breakeven Point in dollars = $15,352 / 0.76
Breakeven Point in dollars = $20,200

Breakeven Point in number of fares = Fixed Costs / Contribution Margin per fare
Breakeven Point in number of fares = $15,352 / $21.28
Breakeven Point in number of fares = 721

Contribution Margin at breakeven point = Fixed Costs
Contribution Margin at breakeven point = $15,352