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Ac 505 Essay

584 words - 3 pages

Jaylen Haynes
AC 505
Professor Wright
Case Study 2
5/20/12

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
...view middle of the document...

6 = 54
train cars (rounded) = 26250 / 54 = 486.1 = 486
d. Contribution margin =$160 - $90 = $70
Break-even point in passengers = fixed costs/contribution margin = 3150000 / 70 = 45000
Passengers = 45000
train cars ( rounded) = 45000 / 63 = 714.2 = 714

e. Before tax profit less the tax rate times the before tax profit = after-tax income =
Profit= selling price*units- variable cost per unit*units – fixed cost
750000 = 205*units – 85*units – 3600000
750000+3600000 = 120*units
Units =4350000 / 120 =
Then, proceed to compute # of passengers -= 36,250

f. # of discounted seats = 72-63 = 9 seats
Contribution margin = 120-70 = 50
for discounted fares 50 X discounted seats = $450 each train X $50? $50 train cars per day X 30 days per month= $675,000 minus $180000 additional fixed costs = $495,000 pretax income.

g. 1. No they should not obtain the new route.

Compute Contribution margin = $175 - $70 = $105
90 X 60% = 90 X .6= 54 seats
BE = 250000 / 105 = 2,381
Trains cars =...

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