point. E5-11 Spencer Kars provides shuttle service between four hotels near a me
ID: 2556642 • Letter: P
Question
point. E5-11 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 1 trips per day. A recent month's activity in the form of a cost-volume-profit income state 2 round ment is shown below Fare revenues (1,500 fares) Variable costs $36,000 Fuel Tolls and parking Maintenance $5,040 3,100 860 9,000 27,000 Contribution margin Fixed costs Salaries Depreciation Insurance 15,700 1,300 1,000 18,000 9,000 Net income Instructions (a) Calculate the break-even point in (1) dollars and (2) number of fares. (b) Without calculations, determine the contribution margin at the break-even point.Explanation / Answer
a) Contribution margin ratio = 27000*100/36000 = 75%
Break even point dollars = 18000/.75 = 24000
Number of fares = 24000/24 = 1000 fares
b) Contribution margin = 27000/1500*1000 = 18000
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