Pronghorn Kars provides shuttle service between four hotels

Pronghorn Kars provides shuttle service between four hotels near a medical center and an month\'s activity in the form of a cost-volume-profit income statement is shown below. n international airport. Pronghorn Kars uses two 10-passenger vans to offer 12 round trips per day. A recent Fare revenues (1,380 fares) Variable costs 27,600 Fuel Tols and parking Maintenance $4,968 2,484 828 8,280 19,320 Contribution margirn Fixed costs Salartes Depreciation Insurance 12,700 1,050 810 14,560 $4,760 Calculate the break-even point in dollars Break-even point Caloulate the break-even point in number of fares Break-even point fares Without caliculations, determine the contributien margn at the break-even point Contribution margin at the break-even point g

Solution

a. Breke even point $       20,800 Working: 1) Contribution Margin ratio = Contribution Margin/Sales Revenue = $       19,320 / $       27,600 = 70% 2) Breke evn point = Fixed Costs /Contribution Margin Ratio =           14,560 / 70% =           20,800 b. Breke even point 1040 fares Working: 1) Selling price per unit = $ 27,600.00 / 1380 = $         20.00 2) Breke even point = Break eevn in dollars / Selling price per unit = $       20,800 / $         20.00 = 1040 c. Contribution Margin at Break even $       14,560 At breake even point, contrbution margin is equal to fixed costs.