3,150,000 fixed cost/120 margin cost per passenger=26,250 passengers 26,250/54 seats=486 passenger cars. 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?
What will be the monthly break-even point in number of passenger cars? 190 -70 = 120 90 * .6 = 54 Break-even for number of cars: (3,150,000 +0)/ (120) = 26250 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
Chad Martin AC 505 Case Study 2 Number of seats per passenger train car 90 Average load factor(% of seats filled) 0.7 Average full passenger fare $160 Average variable cost per passenger $70 Fixed operating cost per month $3,150,000 a. Contribution margin per passenger = $90 Contribution margin ratio = 0.5625 Break-even point in passengers = Fixed costs/Contribution Margin = 35000 Break-even point in dollars = Fixed Costs/Contribution Margin Ratio = $5,600,000 b. Compute # of seats per train car (remember load factor?) 63 If you know # of BE passengers for one train car and the grand total of passengers, you can compute # of train cars (rounded) =? 556 c. Contribution margin =? $120 Break-even point in passengers = fixed costs/ contribution margin 26250 Passengers =?
As a result, the transit authority notes a decline in ridership of 30 percent. Answer a. Compute the price elasticity of demand for subway rides. Fare price increase = 50 to 100 cents, Percent rise in fare (100-50/50) * 100 = 100%, Decline in demand = 30%, Price elasticity = 30/100 = 0.3 b. If the transit authority reduces the fare back to 50 cents, what impact would you expect on the ridership? Why?
Case Study 2 Solution 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 Contribution margin per passanger = $90 Break even point per passanger = $35,000 35000 Contribution margin ratio= $2 Break even point in dollars = $5,600,000 5600000 b. What is the break even point of passenger train cars per month 63 Compute # of seats per train car(remember load factor?) 555.5555556 Number of train cars rounded 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 the monthly break even point in the number of passenger cars?
They were given a 10% discount by the manufacturer. They paid $400 for shipping and sales tax of $3,000. Stine estimates that the machinery will have a useful life of 10 years and a residual value of $20,000. If Stine uses straight-line depreciation, annual depreciation will be • $3,760. • $4,072.
SOLUTION 1. Schedule of cash flows: Year Item Cash Flow 0 Equipment $(300,000) Working capital (30,000) 1–7 Cost savings $135,000 Equipment operating costs (60,000) 75,000 5 Overhaul (30,000) 7 Salvage value 24,000 Recovery of working capital 30,000 2. NPV: Year Cash Flow Discount Factor Present Value 0 $(330,000) 1.00000 $(330,000) 1–7 75,000 4.86842 365,132 5 (30,000) 0.62092 (18,628) 7 54,000 0.51316 27,711 NPV $ 44,215 Yes, the new process design should be
Reporting Intercorporate Interests (Equity vs Cost Method) 1. On January 1, 2007, Rotor Corporation acquired 30 percent of Stator Company’s Stock for $150,000. On the acquisition date, Stator reported Net assets of $450,000 valued at historical cost and %500,000 stated at fair Value. The difference was due to the increased value of buildings with a remaining life of 15 years. During 2007 and 2008 Stator reported Net Income of $25,000 and $15,000 and paid dividends $10,000 and $12,000, respectively.
(five points) Question 2: Determine the total costs of direct materials for August purchases. (five points) Problem 2 - Russell Company has the following projected account balances for June 30, 20X2: Accounts payable | $40,000 | Sales | $800,000 | Accounts receivable | 100,000 | Capital stock | 400,000 | Depreciation, factory | 24,000 | Retained earnings | ? | Inventories (5/31 & 6/30) | 180,000 | Cash | 56,000 | Direct materials used | 200,000 | Equipment, net | 240,000 | Office salaries | 80,000 | Buildings, net | 400,000 | Insurance, factory | 4,000 | Utilities, factory | 16,000 | Plant wages | 140,000 | Selling expenses | 60,000 | Bonds payable | 160,000 | Maintenance, factory | 28,000 | Question 1: Calculate the budgeted net income for June 20X2. (five points) Question 2: Calculate the budgeted total assets as of June 30, 20X2. (five points) Problem 3 - Tylon's Hardware uses a flexible budget to develop planning information for its warehouse operations.
The company’s total costs exceed the total revenue and the marginal cost of the last unit is $30. Table 1 Labor Input | Total Shirts produced | MPL of labor/worker | Total Revenue (shirts sold for $20/ea) | MR | MRP | MCF | 25 | 2531 | 101.24 | 50620 | 20 | 2024.8 | 30 | 50 | 3375 | 67.5 | 67500 | 20 | 1350 | 30 | 75 | 4500 | 60 | 90000 | 20 | 1200 | 30 | 100 | 6000 | 60 | 120000 | 20 | 1200 | 30 | Table 2 Labor Input | Labor Cost/day | Labor Cost/month (20 days/month) | Total Revenue (shirts sold for $20/ea - if EVERY shirt was sold) | 25 | $1,750.00 | $35,000.00 | $700,000.00 | 50 | $3,500.00 | $70,000.00 | $1,400,000.00 | 75 | $5,250.00 | $105,000.00 | $2,100,000.00 | 100 | $7,000.00 | $140,000.00 | $2,800,000.00 | From Table 2 above, we see that in order to maximize profits with little change in costs, the company should keep with 100 workers. However, if Shirts Galore were to maximize profits and lower