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Adeola Adesokan (D03511372)
Case Study 2 ( Spring field express)

  a). Variable cost per passenger=$70.00
Full fare per passenger=$160.00
Contribution margin = $ 160- $ 70 = $ 90 per passenger
      Contribution margin ratio = $ 90/$160 = 56.25%
     
Break-even point in passengers = Fixed costs/Contribution Margin =         $ 3,150,000/$ 90 per passenger = 35,000 passengers       Break-even point in dollars = Fixed Costs/Contribution Margin Ratio=         $ 3,150,000/0.5625 = $ 5,600,000.

  b). Average load factor=70% of 90
90 X 0.70 =63 seats per train car
      35,000/ 63 = 556 train cars ( rounded)

  c.) CM = $190 - $ 70 = $120 per passenger
      90 X .60 = 54 filled seats
      Break-even point in passengers = fixed costs/ contribution margin=         $ 3,150,000/$120 = 26,250 passengers
        26,250/54 = 486 train cars (rounded)

  d.) Contribution margin = $ 160 - $ 90 = $ 70 per passenger       Break-even point in passengers = fixed costs/contribution margin=         $ 3,150,000/ $ 70 per passenger = 45,000 passengers         45,000/ 63 = 714 train cars ( rounded)

  e). Profit=CM ratio*sales-fixed expenses
Unit CM=205-85=120
CM ratio=120/205=0.5854
750,000=0.5854*sales-3,600,000
Sales= (750,000+3,600,000)/0.5854
Sales= 7,430,816
If it cost one passenger 205, then how many would be needed to generate 7,430,816=7,430,816/205=36,248 passengers. f)). Average load factor=70% of 90=63
Load factor of 80%=72
Additional load factor =72-63=9
New fixed costs=3,150,00+180,000=3,330,000
Sale per day =50{(63*160)+(120*9)}=558,000
Sales per month=558,000*30=16,740,000
Variable cost per car=70*72=5040
Variable cost per month=252,000*30=7,560,000
CM=Sales-variable costs
16,740,000-7,560,000=9,180 ,000
Profit=CM-Fixed Expenses
9,180,000-3,330,000=5,850,000
a. New load factor=60% of 90=54
Profit=cm ratio*sales-fixed expenses
New fixed...
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