Managerial Accounting 505 Case Study Week 3
Grade 45/50
Managerial Accounting 505 Case Study Week 3
A. What is the break-even point in passengers and revenues per month?
Total Per Unit Percent
Sales: 160 X 90 $14,400 $ 160 100%
Less variable costs/expenses: .70 X 90 $ 6,300 $70 44%
Contribution margin: $ 8,100 $90 56%
Less fixed costs/expense: $3,150,000
Net operating income: $3,141,900
8,100 /14,400 = 56%
100 - 56 = 44%
BEP in passengers (fixed costs / contribution margin)
3,150,000 / 90 = 35,000 passengers
BEP in dollars (passenger per month X selling price)
35,000 X 160 = 5,600,000
B. What is the break-even point in number of passenger train cars per month?
# of seats per passenger train cars X Average load factor
BEP in passenger’s car per month 35,000/ (90x.70)
35,000/ 63 = 556 passenger train per month
C. If Springfield Express raises its average passenger fare to $190, it is estimated that the average load factor will decrease to 60%. What will be the monthly break-even point in number of passenger cars? Total Per Unit Percent
Selling Price $17,100 $190 100
Less variable costs/expense $6,300 $70 37
Contribution margin $10,800 $120 63
BEP in passengers (fixed cost / unit cm )
3,150,000 / 120 = 26,250
BEP in passengers per month in dollars (fixed costs / cm ratio)
3,150,000 / .63 = 5,000,000
# of seats per passenger train cars X Average load factor 90 X .60 = 54
BEP # of passengers cars 26,250 / (90 X .60) 54 = 486 passengers train cars per month
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 estimated that variable cost per passenger will rise to $ 90. What will be the new break-even point in passengers and in number of passenger train cars?
BEP in passengers Fixed operating cost /contribution margin $3,150,000/ 70 = 45,000 passengers per month
Managerial Accounting 505 Case Study Week 3
A. What is the break-even point in passengers and revenues per month?
Total Per Unit Percent
Sales: 160 X 90 $14,400 $ 160 100%
Less variable costs/expenses: .70 X 90 $ 6,300 $70 44%
Contribution margin: $ 8,100 $90 56%
Less fixed costs/expense: $3,150,000
Net operating income: $3,141,900
8,100 /14,400 = 56%
100 - 56 = 44%
BEP in passengers (fixed costs / contribution margin)
3,150,000 / 90 = 35,000 passengers
BEP in dollars (passenger per month X selling price)
35,000 X 160 = 5,600,000
B. What is the break-even point in number of passenger train cars per month?
# of seats per passenger train cars X Average load factor
BEP in passenger’s car per month 35,000/ (90x.70)
35,000/ 63 = 556 passenger train per month
C. If Springfield Express raises its average passenger fare to $190, it is estimated that the average load factor will decrease to 60%. What will be the monthly break-even point in number of passenger cars? Total Per Unit Percent
Selling Price $17,100 $190 100
Less variable costs/expense $6,300 $70 37
Contribution margin $10,800 $120 63
BEP in passengers (fixed cost / unit cm )
3,150,000 / 120 = 26,250
BEP in passengers per month in dollars (fixed costs / cm ratio)
3,150,000 / .63 = 5,000,000
# of seats per passenger train cars X Average load factor 90 X .60 = 54
BEP # of passengers cars 26,250 / (90 X .60) 54 = 486 passengers train cars per month
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 estimated that variable cost per passenger will rise to $ 90. What will be the new break-even point in passengers and in number of passenger train cars?
BEP in passengers Fixed operating cost /contribution margin $3,150,000/ 70 = 45,000 passengers per month