Bristol Car Service offers airport service in a mid-size city. Bristol charges $

Question

Bristol Car Service offers airport service in a mid-size city. Bristol charges $50 per trip to or from the airport. The variable cost for a trip totals $12, for fuel, driver and so on The monthly fxed cost for Bristol Rainbow Tours is $2,736 Required: a. How many trips must Bristol sell every month to break even tripa b. Bristolts owner believes that 90 trips is a reasonable forecast of the average monthly demand What is the margin of safety in terms of the number of airport trips? trips References eBook &Resources

Explanation / Answer

Sales per unit 50 Variable cost per nit 12 Contribution margin per unit 38 Fixed cost 2736 a) Break even point ( fixed cost/contribution margin) (2736/38) 72 trips b) margin of safety ( forecasted sales-berak even sale) 18 trips (90-72)

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