Airport Connection provides shuttle service between four hotels (answer attached)

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Airport Connection provides shuttle service between four hotels near a medical center and an international airport. Airport Connection 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 (1,440 fares)

 

$36,000

 

Variable costs 

 

 

 

    Fuel

$5,040

 

 

    Tolls and Parking

3,100

 

 

    Maintenance

500

8,640

 

Contribution margin

 

27,360

 

Fixed costs

 

 

 

    Salaries

 13,000

 

 

    Depreciation

1,300

 

 

    Insurance

1,128

15,428

Net Income                             

  

11932

 

 

 

 

Instructions

a.       Calculate the break- even point in (1) dollars and (2) number of fares.

b.      Without calculations, determine the contribution margin at the break-even point.

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