What is the annual number of miles required for a trucking company to break even

Question

What is the annual number of miles required for a trucking company to break even, assuming the company adds one truck and trailer?

Please provide formula and results.

Revenue per mile                                                  

$ 2.20

Variable expenses per mile

$ 1.39

Contribution margin

$ 0.81

Breakeven mileage

Expected annual mileage

Contribution margin

Incremental fixed costs

($50,000) (additional truck + trailer)

Gross annual revenue

Total annual breakeven mileage

Revenue per mile                                                  

$ 2.20

Variable expenses per mile

$ 1.39

Contribution margin

$ 0.81

Breakeven mileage

Expected annual mileage

156,000

Contribution margin

126,360

Incremental fixed costs

($50,000) (additional truck + trailer)

Gross annual revenue

$76,360

Total annual breakeven mileage

????

Explanation / Answer

Trucking Company Break Even Point Particulars Revenue per mile                                                   2.20 Variable expenses per mile 1.39 Contribution margin 0.81 Breakeven mileage: Expected annual mileage 156000 Contribution margin 126360 Break Even Mileage: Incremental fixed costs 50000 Contribution margin 0.81 Total annual breakeven mileage 61,728 (Fixed Cost/Contribution Margin per Mile) (50000/0.81)

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