# Acct505 Case1 Essays

600 Words3 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
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