# Ac 505 Paper

**Topics:**Contribution margin, Variable cost, Railroad car

**Pages:**2 (401 words)

**Published:**July 17, 2012

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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