ACCT505-Case Study 2

# ACCT505-Case Study 2 - Nikki Owen Case Study 2...

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Nikki Owen Case Study 2 07/26/2012 ACCT505-Managerial Accounting Professor Anita Wibbert A. What is the break-even point in passengers and revenues per month? (1) Per passenger Sales..… \$160 Variable Expenses………….\$70 Unit Contribution Margin…………….\$90=\$60-\$70 Fixed expenses/ Unit Contribution Margin=\$3,150,000/\$90=35,000 passengers in break-even point (2) Contribution Margin Ratio (CM Ratio)= Contribution Margin/Selling Price=\$90/\$160=0.5625 Break-even point in dollars=Fixed Costs/Contribution Ratio=\$3,150,000/0.5625=\$5,600,000 B. What is the break-even point in number of passenger train cars per month? Number of seats per train car= Average load factor x Number of seats per train car=0.70 x 90=63 passengers per train on average Passengers in break-even point/ Number of seats per passenger train=Number of passenger train cars per month to break-even= 35,000/63=555.5 0r 556 train cars C. If Springfield express raises its average passenger fare to \$190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars? Number of seats per train car=Average load factor x Number of seats per train= 0.60 x 90= 54 passengers per train on average Per unit Sales……………\$190 Variable Expenses……………\$70 Unit Contribution Margin………………….\$120=190-70

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