Question 11
Pharoah provides shuttle service between four hotels near a medical
center and an international airport. Pharoah uses two 10-passenger
vans to offer 12 round trips per day. A recent month’s activity in
the form of a cost-volume-profit income statement is shown
below.
Sales (1,340 passengers) |
|
|
|
$37,520 |
Variable costs |
|
|
|
|
Fuel |
|
$5,673 |
|
|
Tolls and parking |
|
2,739 |
|
|
Maintenance |
|
968 |
|
9,380 |
Contribution margin |
|
|
|
28,140 |
Fixed costs |
|
|
|
|
Salaries |
|
12,700 |
|
|
Depreciation |
|
2,100 |
|
|
Insurance |
|
2,000 |
|
16,800 |
Net income |
|
|
|
$11,340 |
|
|
|
|
|
(b)
Without calculations, determine the contribution margin at the
break-even point.
Contribution margin at the break-even point |
|
$ |
|
|
|
Break Even Point in Dollars - $22,400
Break Even Number of Passengers - 800