Case Study 2

Case Study 2
Springfield Express is a luxury rider cable carrier in Texas.



exclusively sit down are first class, and the following data are available:
Number of seats per passenger train car 90
honest demoralise factor (percentage of seats filled) 70%
Average total passenger fare $ 160
Average variable cost per passenger $ 70
rigid operating cost per month $3,150,000

Formula :
receipts = Units Sold * Unit price
component part gross profit = Revenue All Variable greet
Contribution bank Ratio = Contribution strand/Selling Price
Break crimson Points in Units = (Total Fixed be + Target Profit )/Contribution valuation reserve
Break Even Points in Sales = (Total Fixed Costs + Target Profit )/Contribution Margin Ratio
Margin of Safety = Revenue - Break Even Points in Sales
Degree of Operating Leverage = Contribution Margin/Net Income
Net Income = Revenue Total Variable Cost Total Fixed Cost
Unit Product Cost use Absorption Cost = (Total Variable Cost + Total Fixed Cost)/# of units

a.Contribution marge per passenger =90
Contribution margin proportionality =.57
Break-even point in passengers = Fixed be/Contribution Margin = 35,000 passengers
Passengers
Break-even point in dollars = Fixed Costs/Contribution Margin Ratio = 3150000/.57
$ ? =$5,526,316

b.Compute # of seats per train car (remember load factor?)
If you know # of BE passengers for one train car and the grand total of passengers, you can compute # of train cars (rounded) =?=35000/63 = 556 cars

c. Contribution marg in =?
Break-even point in passengers = fixed costs/ contribution margin 3150000/120
Passengers =26250
train cars (rounded) =26250/54 = 486 cars

d.Contribution margin =70
Break-even point in passengers = fixed costs/contribution margin
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