Question 1 t income statement is shown Spencer Kars provides shuttle service bet

Question

Question 1 t income statement is shown 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 below, $39,000 Fare revenues (1,300 fares) Variable casts Fuel Tolls and parking $6,334 3,895 1,091 11,310 27,590 Contributien margin Fixed costs Salarles Depreciation 12,900 1,400 12 14,342 Net income $13,248 Calculate the break-even pcint in dollars Break-even point Calculate the break-even point in number of fares. (Round ??swer to 0 decimal places, eg. 5,275.) Break-even point fares LINK TO TEXI LINK TO TEXT Without calculations, determine the contribution margin at the break-even point Contribution margin at the hreak-even point

Explanation / Answer

a) Contribution margin per unit = 27690*100/39000 = 71%

Break even point in dollars = Fixed cost/Contribution margin ratio

= 14342/.71

Break even point in dollars = 20200

b) Contribution margin per unit = 27690/1300 = 21.30 per unit

Break even point = 14342/21.3 = 673 fares

c) Contribution margin at break even point = 673*21.30 = 14335

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