Case 2 Week 3 Essay

Below is a free essay on "Case 2 Week 3" from Anti Essays, your source for free research papers, essays, and term paper examples.

Case Study 2
Springfield Express

7/29/2012
Managerial Accounting

Case Study 2

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

a. What is the break-even point in passengers and revenues per month?
CM = \$160-\$70=\$90 per passenger
CM ratio = 90/160=56.25
3150000 / 90 = 35 passengers
3150000 / 0.5625 = 5,600,000

b. What is the break-even point in number of passenger train cars per month?

(Average Passenger per Car) 90 x .70= 63
(Break Even in Train Cars) 35,000/63= 556

c. If Springfield Express raises its average passenger fare to \$ 190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars?

(Break Even in passengers) 3,150,000/ (190-70) = 26250
(Average Passengers per Car) 90 x .60= 54
(Break Even In Train Cars) 26250/54= 486

d. (Refer to original data.) Fuel cost is a significant variable cost to any railway. If crude oil increases by \$ 20 per barrel, it is estimated that variable cost per passenger will rise to \$ 90. What will be the new break-even point in passengers and in number of passenger train cars?

(Break even in passengers) 3,150,000 / (170-90) = 39,375
(Average Passengers per Car) 90 x .70= 63
(Break Even in train Cars) 39,375/63= 625

e. Springfield Express has experienced an increase in variable cost per passenger to \$ 85 and an increase in total...

Welcome

Anti Essays offers free essay examples to help students with their essay writing.

Plagiarism Warning

The essay examples on Anti Essays are for research purposes ONLY. Do NOT submit an essay example as your own. If you use any information from a sample essay, please cite it. MLA and APA citations can be found at the bottom of this free essay.

Citations

MLA Citation

"Case 2 Week 3". Anti Essays. 8 Mar. 2014

<http://www.antiessays.com/free-essays/303599.html>

APA Citation

Case 2 Week 3. Anti Essays. Retrieved March 8, 2014, from the World Wide Web: http://www.antiessays.com/free-essays/303599.html