AC505 – Managerial Accounting Case Study 2

Apr 28th, 2015
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DeVry University
Course: General Education
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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)

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Elizabeth Hurtado2259-41st Ave. Oakland, CA 94601AC505 Managerial AccountingCase Study 2Richard AdamichDeVry Universitya). Variable cost per passenger=$70.00Full fare per passenger=$160.00Contribution margin = $ 160- $ 70 = $ 90 per passengerContribution 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 9090 X 0.70 =63 seats per train car35,000/ 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). After-tax income = $ 750,000/ ( 1 tax rate)= $ 750,000/ ( 1 0.30)=

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