Submitted by: Submitted by elsmth
Views: 198
Words: 453
Pages: 2
Category: Other Topics
Date Submitted: 10/03/2011 01:08 AM
A. BEP in passengers = fixed operating cost per month / contribution margin
*CM = 160 – 70 = 90
BEP in passengers = 3,150,000/90 = 35,000
BEP in revenues = BEP in passengers x fare
35,000 x 160 = $2,100,000
B. BEP in passenger cars = fixed operating cost per month / (passengers x 30)
3,150,000 / (90 x 30) = 1,166.67
C. New BEP in passenger cars = (raised fare – VC) x passengers x % decrease
(190 -70) x 90 x .60 = 6,480
BEP per passenger car = fixed operating cost per month / adj. BEP in passenger cars
3,150,000 / 6,480 = 486.11
D. CM per passenger = fare – rise in VC
160 – 90 = 70
CM per passenger car = CM per passenger x avg. load factor x passengers
70 x .70 x 90 = 4,410
BEP in passengers = fixed operating cost per month / CM per passenger
3,150,000 / 70 = 45,000
BEP per passenger car = fixed operating cost per month / CM per passenger car
3,150,000 / 4,410 = 714.29
E. Profit = 750,000 / CMR
CMR = CM / Sales Revenue
CMR= 90 / 160 = 0.6
Profit = 750,000 / 0.6 = 1,250,000
New CM per passenger = raised average fare – increased VC
205 – 85 = 120
Number of passengers = (increased TFC + Profit) / New CM per passenger
(3,600,000 + 1,250,000) / 120 = 40,416.67
F. CM of additional passenger cars = (discounted fare – VC) x (increased load factor – avg. load factor) x passengers
(120 – 70) x (.80 - .70) x 90 = 450
Additional pre- tax income = (CM of additional passenger cars x cars per day x 30 days per month) – additional advertising cost
(450 x 50 x 30) – 180,000 = 495,000
G. 1. Additional CM = (passengers x load factor) x (avg. load factor – VC) x 20 times per month
(90 x .60) x (.70 – 70) x 20 = 74,844
Additional CM – Additional FC =
-74,844 – 250,000 = -$324,844
Springfield would incur a loss if they obtain this route, they shouldn’t obtain it.
2. CM per passenger car = (passenger x load factor) x new CM per passenger
(90 x .60) x 120 = 6,480...