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 Calculate the break-even point in (1) dollars and (2) number of fares. Break-even point in dollars $ Break-even point in fares Without calculations, determine the contribution margin at the break-even point.

Explanation / Answer

THIS WILL BE HELPFUL FOR YOU AND PL RATE ME FIRST $1,100) and fixed costs are given as $6,000. So total costs are $22,500 (16,500 + 6,000). Since a profit of $5,000 was made, Total sales must be $27,500 (22,500 + 5,000). So now you can write the formula: Margin of Safety Ratio = 12,000 / 27,500 = 43.6...

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