mountain bus - Mountain Bus Ltd-Partial Solution Note: I am...

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Mountain Bus Ltd—Partial Solution Note: I am unable to provide a complete solution to this problem. We worked through the solution in class, and I have provided approximate check figures below. Mountain Bus Ltd. operates a fleet of 20 buses in a large municipality. The city is a tourist destination, so last year Mountain Bus purchased one bus to enter the market for providing guided tours. This is their only venture in this market, as all other 19 buses are used to provide city transit services. This new bus provides tour services (TOUR) 50% of the year and the other half of the year it provides services to school sports teams (TEAM). The bus cost $415,000 and can carry forty passengers. The bus is expected to provide 300,000 kilometers of service with no salvage value at the end of its useful life. Mountain Bus Ltd has no use for this bus in their transit service. The driver of the bus is paid the same hourly rate as the guide. The TOUR requires a driver and a guide, while the TEAM only requires a driver. The bus is providing a service to the public and therefore the maintenance is regulated. The bus is sent in for maintenance every 45,000 kilometers or twelve months, which ever comes first. This maintenance overhaul costs $34,000 and is outsourced. Regular weekly maintenance cost is nominal and performed by workers at Mountain Bus’ central depot. Tour/Team figures for the year 2004: Description TOURS (April- Sept.) TEAMS (October – March) Days per week 7 3 Hours per trip (maximum one trip per day) 6 5 Trips per year 182 78 Passenger demand per trip (#) 30 20 Price per trip for each passenger $50 $25 Passengers per year 5,460 1,560 Distance per trip (km) 200 km 100km Weeks per year for each “season” 26 26 Tour/Team 2008 Financial Results provided by Mountain Bus Ltd’s accounting department extracted from the audited statements are as follows:
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This note was uploaded on 05/03/2010 for the course COMM Comm 354 taught by Professor Sandra during the Spring '09 term at The University of British Columbia.

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mountain bus - Mountain Bus Ltd-Partial Solution Note: I am...

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