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# Break-even point and contribution margin at break-even point

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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.

#### 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 ...

#### Solution Summary

The solution contains step by step workings to arrive at break-even point and the contribution margin at the break-even point.

\$2.19