Acct 505

Topics: Variable cost, Contribution margin, Management accounting Pages: 3 (608 words) Published: March 12, 2013
Case Study: Springfield Express ACCT 505
Elizabeth R Mandes
Prof. Hany Faltas
Keller Graduate School of Management
January 27, 2013

Springfield Express
A. Break-Even Point in passengers and revenues per month:
Break-Even Point (Revenue) = Fixed Cost / Contribution Margin Ratio Contribution Margin Ratio = Price per Unit – Variable Cost per Unit / Price per Unit = $160 - $70 / $160 = $.56

Break - Even Point Revenue = $3,150,000 / .56
= $5,625,000 Break – Even Point (Passengers) = Break - Even Point Revenue / Full Passenger Fare = $5,625,000 / 160 = $35,156 B. Break – Even Point by number of passenger trains per month: Break – Even Point (Trains) = Break – Even Point (Passengers) / Seats per train car = $35,156 / 90 = 391

Break – Even Point (Trains) = 391 Trains x Average Load Factor (70%) = 391 x 7 = 274 C. Monthly Break - Even Point in number of passenger cars:

Break – Even Point (Revenue) = 3,150,000 Fixed Cost / Contribution Margin Ratio Contribution Margin Ratio = $190 - $70 / $190
= $.63
Break - Even Point (Revenue) = $3,150,000 / 63
= $5,000,000 Break – Even Point (Passengers) = $5,000,000 / $190 (Passenger Fare) = $26,316 passengers Break – Even Point (Trains) = 26,316 / 90

= 292 Trains 292 trains x 60% Average Load Factor = 175 Trains
Monthly Break – Even...
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