Ac505 Case Study

In: Business and Management

Submitted By hotat32
Words 735
Pages 3
SUPPLIED DATA

Number of seats per passenger train car 90

Average load factor (percentage of seats filled) 70%

Average full passenger fare $ 160

Average variable cost per passenger $ 70

Fixed operating cost per month $3,150,000

a. What is the break-even point in passengers and revenues per month?

Unit Sales to Break-Even= $0 + Fixed Expenses/ Unit Contribution Margin

Break-even point in passengers (units): 35,000

Dollars to attain break even= $0 + Fixed Expenses/ CM Ratio

Break-even in revenues: $5,600,000

b. What is the break-even point in number of passenger train cars per month?

Avergae load per car= 90*.7= 63

Break even point in passengers= 3,500

BEP in passenger train cars= 556*

*Rounded up to next car

c. If Springfield Express raises its average passenger fare to $ 190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars?

Average load per car= 90*.6= 54

Break Even Point in passengers= 26,250

BEP in passenger train cars= 487*

*Rounded up to next car assumimg that even a fraction of another car would require another

d. (Refer to original data.) Fuel cost is a significant variable cost to any railway. If crude oil increases by $ 20 per barrel, it is…...

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