Airport Connection provides shuttle service between four hotels near a medical c

Question

Airport Connection provides shuttle service between four hotels near a medical center and an international airport. Airport Connection 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.
Fare revenues (1,440 fares) $36,000
Variable costs
Fuel $5,040
Tolls and Parking 3,100
Maintenance 500
8,640

Contribution margin 27,360
Fixed costs
Salaries 13,000
Depreciation 1,300
Insurance 1,128
15,428

Net income $11,932








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Calculate the break-even point in (1) dollars and (2) number of fares.
Break-even point in dollars $
Break-even point in fares








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Without calculations, determine the contribution margin at the break-even point.
$

Explanation / Answer

break-even point in (1) dollars =selling price *Fixed cost/contribution margin =($36,000/1440)*(15,428/( 27,360/1440)) = $20,300.00 break-even point in (1) number of fares =Fixed cost/contribution margin =(15,428/( 27,360/1440)) =812 fares contribution margin at the break-even =812*27,360/1440 = $15,428

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