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Grade 45/50 Bureaucratic Accounting 505 Case Study Week 3 A. What is the break-even justification in passengers and revenues monthly? Total Every UnitPercent Sales: 160 Times 90 $14, 400$ 160100% Less varying costs/expenses:. seventy X 80 $ six, 300 $7044% Contribution perimeter: $ almost 8, 100$9056% Less fixed costs/expense: $3, 150, 000 Net operating income: $3, 141, 900 almost 8, 100 /14, 400 sama dengan 56% 90 , 56 = 44% BEP in passengers (fixed costs as well as contribution margin) 3, one hundred and fifty, 000 as well as 90 sama dengan 35, 1000 passengers BEP in dollars (passenger monthly X offering price) 35, 000 Back button 160 = 5, six-hundred, 000 N.
Precisely what is the break-even point in range of passenger educate cars per month? # of seats per passenger coach cars Back button Average insert factor BEP in passenger’s car a month 35, 000/ (90x. 70) 35, 000/ 63 = 556 passenger train each month C. If perhaps Springfield Express raises the average voyager fare to $190, roughly the average insert factor can decrease to 60%. And what will be the monthly break-even point in quantity of passenger cars? Total Per UnitPercent Selling Price $17, 100$190100 Less variable costs/expense$6, 300$70 thirty seven Contribution margin$10, 800$12063 BEP in individuals (fixed cost / device cm ) 3, 150, 000 as well as 120 sama dengan 26, two hundred fifty
BEP in passengers per month in dollars (fixed costs / cm ratio) a few, 150, 500 /. 63 = your five, 000, 000 # of seats every passenger coach cars Times Average insert factor 90 X. 60 = fifty four BEP # of passengers cars 21, 250 / (90 Times. 60) 54 = 486 passengers educate cars per month D. Consider original data. ) Fuel cost is a significant variable cost to any railway. If crude oil increases by $ twenty per clip or barrel, it is estimated that adjustable cost every passenger will rise to $ 85. What will always be the new break-even point in individuals and in number of passenger train cars? BEP in travellers Fixed working cost /contribution margin 3, 150, 000/ 70 sama dengan 45, 000 passengers a month BEP # of people per car 90x. 70 = 63 passenger every car People per month/passenger train automobiles 45, 000/63= 714 passenger train vehicles per month Electronic. Springfield Exhibit has knowledgeable an increase in variable cost every passenger to $ eighty-five and an increase in total set cost to $ a few, 600, 500. The company features decided to raise the average service to dollar 205. In the event the tax level is 30 %, how many passengers per month are needed to generate an after-tax earnings of dollar 750, 000? Before duty profit sama dengan after-tax profit /100%-tax price % 750, 000/(1. 00-. 30)= $1, 071, 429
Before tax profit + fixed cost/New contribution margin $, 1, 071, 429 + $3, 600, 000/($205-$85) = $4, 671, 429/$120 = 38928. 56 or perhaps 38, 929 passenger a month. F. (Use original data). Springfield Communicate is taking into consideration offering a reduced fare of $ 120, which the company believes would increase the weight factor to 80 percent. Only the additional seats would be sold at the reduced fare. Added monthly marketing cost would be $ one hundred and eighty, 000. How much pre-tax income would the discounted fare provide Springfield Express in the event the company offers 50 traveler train cars per day, 30 days per month?
Revenue= 90 back button (. 80-. 70) back button 120 times 50 x 30 & $180, 500 = $1, 800, 000 Variable cost= $70 by ($1, 800, 000/discount cost ($120) sama dengan 1, 050, 000 Additional monthly promoting cost = $180, 500 Revenue¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦$1, 800, 000 Much less Variable cost¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦($1, 050, 000) Contribution Margin¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦ $750, 000 Less Advertising and marketing cost¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦ ($180, 000) Pretax income discount fare provide¦¦¦.. $570, 1000 f# of discounted seating = 80 X. zero = being unfaithful seats Contribution margin for discounted prices = bucks 120 , $ seventy = $ 50 X on the lookout for discounted seating = $450 each educate X 60 train autos per day Back button 30 days every month= $ 675, 1000 minus money 180, 000 additional fixed costs = $ 495, 000 pretax income. G. Springfield Share has an possibility to obtain a new route that might be traveled 20 times monthly. The company believes it can sell seats in $ a hundred seventy five on the route, nevertheless the load aspect would be only 60 percent. Fixed cost would enhance by $ 250, 1000 per month for added personnel, extra passenger teach cars, maintenance, and so on.
Adjustable cost every passenger will remain at $ 75. 1 . Should the company get the route? Revenue= 90 times (. 6) X $175, 20= $189, 000 Varying cost= $70 x ($189, 000/ do ($175) sama dengan $75, 600 Additional regular monthly Fixed expense = $250, 000 Revenue¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦$189, 000 Much less Variable cost¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦($75, 600) Contribution Margin¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦ $113, 400 Much less Fixed cost¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦, ,.. ($250, 000) Pretax income loss¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦¦. $136, 000) The company should not go for the new route since they will lose money because the Total Additional Contribution Margin is not >, Additional Set Costs installment payments on your How a large number of passenger coach cars need to Springfield Exhibit operate to earn pre-tax income of $ 120, 000 per month on this path? Before taxes profit & fixed cost/Contribution margin $120, 000+$250, 000 / ($175-$70) = a few, 523. seventy eight or 3524 # of seats every passenger educate cars X Average fill factor 80 X. zero = fifty four Passengers every month/passenger train cars 3524/54 = sixty-five. 25 or 65 passenger train cars needed several. If the load factor could be increased to 75 percent, how a large number of passenger educate cars must be operated to earn pre-tax income of $ 120, 000 each month on this course? Before tax profit + fixed cost/Contribution margin $120, 000+$250, 000/($175-$70) = several, 523. 81 or 3524 # of seats per passenger coach cars Back button Average weight factor 90 X. your five = 67. 50 Individuals per month/passenger train autos 3524/67. 60 = 52. 20 or perhaps 52 passenger train autos needed 4. What qualitative factors should be considered by Springfield Express in making its decision about attaining this way? If fixed cost improved to $250, 000 Set cost (25, 000 X 2) sama dengan $500, 000 = set cost + required profit)/contribution margin every seat = (500000 + 120000) as well as 61 sama dengan 62, 0000 / sixty one = 10164 Seats
Seats price average (131*10164) 1331484 Variable price (70*10164) 711480 Contribution 620004 Fixed price 500000 Salary Fixed expense variable price, contribution margin income loading factors should be considered before choosing decision. 5. Springfield should consider such things as ¢Connections to different Springfield teaches that might be of these individuals. ¢Long-range possibility of increased weight factors ¢Increased customer goodwill in this new market ¢Increased employment opportunities intended for labor inside the area ¢Competition in the market. 120004
