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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
Fixed Expenses/Contribution Margin=$3,150,000/120=26,250 passengers to
break-even
Break-even point in passengers/ average passengers per train= break-even point in

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