Question

IS expand Managerial Accounting, Be CALCULATOR PRINTER VERSION BACK NEC Exercise 5-11 (Video) 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. Sales (1,500 passengers) $36,000 Variable costs Fuel $5,040 Toils and parking 3,100 Maintenance 860 9.000 Contribution margin 27,000 Fixed costs Salaries 15,700 Depreciation 1,300 Insurance 1,000 18,000 Net Income $9.000 Calculate the break-even point in dollars. Break-even point LINE TO TEXT VIDEO SARRE Calculate the break-even point in number of passengers. Break-even point passengers di I 9A MacBook Pro G Search or type URL 3 4 5 0 6 7 8 9 E R T Y P U o 1 D F G H J к > C V B N M V -

Answer 1

Answer:

1	Break-even point	$24,000
2	Break-even point	1,000	passengers
3	Contribution margin at the break-even point	$18,000

Calculations:

1.Contribution margin ratio = $27,000/$36,000 = 0.75 or 75%

Break-even point = Fixed cost ÷ Contribution margin ratio = $18,000/75% = $24,000

.

2.Contribution margin per unit = $27,000/1,500 = $18

Break-even point = Fixed cost ÷ Contribution margin per unit = $18,000 ÷ $18 = 1,000 passengers

.

3. At Break-event point, Fixed cost = Contribution margin. Therefore, contribution margin = $18,000