Pina Colada Kars provides shuttle service between four hotel

Pina Colada Kars provides shuttle service between four hotels activity in the form of a cost-volume-profit income statement is shown below near a medical center and an internstionel airport. Pina Colada Kers uses two 10-passenger vans to offer 12 round trips per day. A recent month\'s Fare revenues (1,390 fares) 27,800 Fuel Tols and parking Mairtenance $4,170 2,085 695 6,950 Contribution margin Fixed costs 20,850 Salaries Depreciation Insurance 14,390 1,190 920 16,500 4,350 Net income Celculete the break-even peint in dollars. Break-even point Calculate the break -even point in number of fares Break-even point fares Without calculetions, determine the contribution margin at the break-even point Contribution margin at the break-even poirt s

Solution

Contribution margin 20850 Number of units 1390 Contribution margin per unit 15 Contribution margin ratio = Contribution margin / sales CM ratio 20850/27800 75% 2 Break even in units = Fixed expense / contribution margin per unit Fixed expense 16500 Contribution per unit 15 Break even in units 1100 Fares 1 Breakeven in dollars = Fixed expense / contribution margin ratio Fixed expense 16500 Contribution margin ratio 75% Break even in Dollars 22000 (16500/75%) 3 Contribution margin at breakeven 1100*15 16500 Contribution margin at breakeven = fixed cost