Exercise 22-8 LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT Exercise 22-8
ID: 2536869 • Letter: E
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Exercise 22-8
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Exercise 22-8
Spencer Kars provides shuttle service between four hotels near a medical center and an international airport. Spencer Kars 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 (1,370 fares) $34,250 Variable costs Fuel $3,836 Tolls and parking 2,359 Maintenance 655 6,850 Contribution margin 27,400 Fixed costs Salaries 12,300 Depreciation 1,100 Insurance 3,480 16,880 Net income $10,520
Explanation / Answer
1 PV Ratio Contribution/Total Revenue 0.8 Break Even point in Dollars Fixed Cost/ PV Ratio 21100 Break Even point in Dollars 21100$ 2 $ Contribution per round (27400/1370) 20 Break even point in Numer of round Fixed cost /Contribution per unit) 3 Contribtion margin at Break even point 16880$
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