Break-even point and contribution margin at break-even point
Not what you're looking for?
Model Transport provides shuttle service between four hotels near a medical center and an international airport.
A recent month's activity in the form of a cost-volume-profit income statement is shown below:
Fare revenues (1,440 fares) $57,600 Variable costs Fuel $9,000 Tolls and parking 3,100 Maintenance 2,300 14,400 Contribution margin 43,200 Fixed costs Salaries 15,000 Depreciation 2,000 Insurance 1,000 18,000 Net income $25,200
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.
Purchase this Solution
Solution Summary
The solution contains step by step workings to arrive at break-even point and the contribution margin at the break-even point.
Solution Preview
(a) Break-even point:
Contribution margin ratio = Contribution margin / Sales revenue
= $43,200 / $57,600
= 75%
Break-even point in (1) Dollars = Total ...
Education
- MPhil, Madurai Kamaraj University
- MCom, Annamalai University
- IATA, International Air Transport Association
Recent Feedback
- "Great explanations on how the answers were obtained."
- "Love the way she explains everything step by step."
- "Solutions were thoroughly explained."
- "Excellent explanations of how problems are solved"
- "Thanks"
Purchase this Solution
Free BrainMass Quizzes
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Motivation
This tests some key elements of major motivation theories.
Basics of corporate finance
These questions will test you on your knowledge of finance.
Learning Lean
This quiz will help you understand the basic concepts of Lean.