670 words - 3 pages

(1) Passengers Per Train | 90 |

(2) Load Factors | 70% |

(3) Full Fare Seats Filled (1) * (2) | 63 |

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(4) Fare | $ 160 |

(5) Less Variable Costs Per Customer | $ (70) |

(6) Contribution Margin Per Customer (4) - (5) | $ 90 |

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(7) Revenue Per Car [ (4) * (3) ] | $ 10,080 |

(8) Contribution Margin Per Car [ (6) * (3) ] | $ 5,670 |

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(9) Fixed Costs | 3,150,000 |

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a. | |

(10) Breakeven (passengers) [ (9) / (6) ] | 35,000 |

(11) Breakeven revenue [ (10) * (4) ] | $ 5,600,000 |

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b. | |

(12) Breakeven number of cars [ (9) / (8) ] | 555.56 |

(13) Round up to nearest whole number of cars | 556 |

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c. | |

(14) New Fare | $ 190 ...view middle of the document...

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(43) Travel Times Per month | 20 |

(44) Fare Per Seat | $ 175 |

(45) Load Factor | 60% |

(46) Variable Cost Per Seat | $ 70 |

(47) Additional Fixed Costs | $ 250,000 |

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1. Should the Company Do the New Route? | |

(48) Additional Contribution Margin Per Passenger [ (44) - (46) ] | $ 105 |

(49) Seats Loaded Per Train [ (1) * (45) ] | 54 |

(50) Total Monthly Contribution Margin [ (43) * (48) * (49) ] | $ 113,400 |

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No, Total Additional Contribution Margin is not > Additional Fixed Costs | |

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2. How many passenger train cars must Springfield Express operate to earn pre-tax income of $ 120,000 per month on this route? | |

(51) Needed Pre-tax Income | $ 120,000 |

(52) Total Fixed Costs | $ 250,000 |

(53) Needed Additional Contribution Margin [(51) + (52)] | $ 370,000 |

(54) Additional Contribution Margin Per Train [ (48) * (49) ] | $ 5,670 |

(55) Needed Number of Trains Per Month [ (53) / (54) ] | 65.26 |

(56) Round Up to Nearest Whole Number of Trains | 66 |

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3. If the load factor could be increased to 75 percent, how many...

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