Acct505 Case1 Essays

600 WordsMay 29, 20133 Pages
Case Study 1 Springfield Express is a luxury passenger carrier in Texas. All seats are first class, and the following data are available: 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 Formula : Revenue = Units Sold * Unit price Contribution Margin = Revenue – All Variable Cost Contribution Margin Ratio = Contribution Margin/Selling…show more content…
Before tax profit less the tax rate times the before tax profit = after-tax income = $ Then, proceed to compute # of passengers -=? VC=85, FC=360000, Fare=205, Tax=30% CM=205-85=120 After tax = 750000/.70=1071428.57 # of passenger 205-85=1071429+3600000*120 = 4671429 4671429/129 = 38928.57 or 38929 f. # of discounted seats = ? Contribution margin for discounted fares X # discounted seats = $ each train X$ ? train cars per day X ? days per month= $? minus $ additional fixed costs = $? pretax income. 90*80%= 72-63= 9 seats 9*50*30=13400 CMU=120-70=50 13500*50=675000 675000-180000=495000 pre tax income g. 1. Compute Contribution margin =175-70=150 per passenger Then, # seats X $ X # train cars = 90*60=54 seats*105*20 = $ 113400 Increased fixed cost ( ?) (250000) Pretax gain (loss) on new route $ 136600 2 and 3. Compute # of passengers and train cars using computation approaches employed in some of the above problems. 175x-$70x-$250000=$120000 , 105x=370000, x=3524 passenger 3524/54=65 train car, 3.90*75= 68 seat filled, 3524/68= 52 train cars 4. Springfield should consider such things as (Think

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