Case Study 1 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? Contribution Margin/Passenger = 160 -70 Contribution margin ratio = 160- 70/ 160 Break Even Points in Units = (Total Fixed Costs + Target Profit )/Contribution Margin Break-even for passengers: (3,150,000 + 0) / (160-70):35000 Break Even Points in Sales = (Total Fixed Costs + Target Profit )/Contribution Margin Ratio Break-even for revenues: (3,150,000 + 0)/ (90/160): $5,600,000 b. What is the break-even point in number of passenger train cars per month?
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?
(TCO A) On March 1, 2010, Ruiz Corporation issued $800,000 of 8% nonconvertible bonds at 104, which are due on February 28, 2030. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase for $50 one share of Ruiz common stock, par value $25. The bonds without the warrants would normally sell at 95. On March 1, 2010, the fair market value of Ruiz's common stock was $40 per share and the fair market value of the warrants was $2.00. What amount should Ruiz record on March 1, 2010 as paid-in capital from stock warrants?
Case Study 1 a) What is the break-even point in passengers and revenues per month? Contribution margin per passenger = $ 160- $ 70 = $ 90 per passenger Contribution margin ratio = $ 90/$160 = 56.25% Passengers = $3,150,000/$ 90 per passenger = 35,000 passengers Break-even point in dollars = $ 3,150,000/0.5625 = $ 5,600,000 b) What is the break-even point in number of passenger train cars per month? Average load factor = 70% of 9090 X 0.70 = 63 seats per train car 35,000/ 63 = 556 train cars 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? Contribution margin = $190 - $ 70 = $120 per passenger 90 X .60 = 54 filled seats Break-even point in passengers = $ 3,150,000/$120 = 26,250 passengers 26,250/54 = 486 train cars d) (Refer to original data.)
Managerial Accounting Springfield Express Case Study Case Study 1 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? The break-even point in passengers and revenues is calculated below: $3,150,000 / 90 = 35,000 are the break-even point in passengers per month. 90 / $160 = 0.562556.25% $3,150,000 / 0.5625 = $5,600,000 is the break-even point in revenue per month.
Question 2. Levered Inc. and Unlevered Inc. are identical in every respect except for capital structure. Both companies expect to earn $96 million in perpetuity, and both distribute all of their earnings as dividends. Levered’s perpetual debt has a market value of $275 million and the required return on its debt is 8%. Levered’s stock sells for $100 per share, and there are 4.5 million shares outstanding.
A commitment was made for 29 of the 47 luxury suites in the new ballpark at prices from $600,000 and $800,000 and will have a 74 seat club which would be priced at $700 per ticket. For ordinary seats, the club would send out a relocation plan. There would be about 11000 non-premium seats at field level and 12000 at the main level. In the final season of the current stadium, the team had 162 legend seats priced at $1000 a game. Behind that are 3000 Field Champion seats, which were sold for $250 a game this year as part of seasons tickets.
Labor hours 20,000 The labor productivity (in hours) for Limited car: Units sold = 6,000 = 0.2 units per labor hour. Labor hours 30,000 The labor productivity (in dollars) for Deluxe car: Units sold * price/unit = 4,000 x 8,000 = 32,000,000 = 133.33 dollar per labor hour Labor hours * labor salary/hour 20,000 x 12 240,000 The labor productivity (in dollars) for Limited car: Units sold * price/unit = 6,000 x 9,500 = 57,000,000 = 135.71 dollar per labor hour Labor hours * labor salary/hour 30,000 x 14 420,000 Conclusion: For Deluxe car: on average, for every dollar the car manufacturer has spent, they get 132,33 dollar in return. While the units produced for every labor hour are 0.2 units. We could conclude that the car manufacturer makes huge profit for making Deluxe car. If we measure labor productivity in terms of units/hour, there will be quite enough important factors that we do not consider, such as the quality of the car (the selling price) and the skill level of the labors.
In that same year the average yearly income for was $750! Present day standards for the yearly average income are 18,500. Henry Ford now would be making around 345 million. The disparity in wealth grew largely throughout 1920 .the number of millionaires increased from 21 in 1920 to close to 15,00 in 1929 . The average disposable Income rose 9% from 1920 to 1929, while the top 1% enjoyed a stupendous 75% increase of disposable income.
Case Study 1: Springfield Express Course Acct 505-Managerial Accounting January 25, 2014 Springfield Express is a luxury passenger carrier in Texas. All seats are first class, and the following data are available: Seats per passenger train car 90 Load factor (percentage of seats filled) 70% Average fare $ 160 Average variable cost per passenger $ 70 Fixed operating cost per month $3,150,000 A. Contribution margin per passenger = $160 - $70 = $90 Contribution margin ratio = $90/$160 = 56.25% Break-even point in passengers = Fixed costs/Contribution Margin = $3,150,000/$90 Passengers = 35,000 Break-even point in dollars = Fixed Costs/Contribution Margin Ratio = $3,150,000/56.25% = $5,600,000 B, (90 X 70%) = 63 Break-even point in passengers = 35,000 passengers Number of cars = 35,000/63 = 556 cars C. Contribution margin = $190 – $70 = $120 Compute number of seats per train car (remember load factor?) (90 X 60%) = 54 Break-even point in passengers = $3,150,000/$120 = 26,250 passengers Number of cars = 26,500/54 = 486 cars D. Contribution margin = $190 - $90 = $70 Break-even point in passengers = Fixed costs/Contribution Margin = $ 3,150,000/$70 Passengers =45,000 BE = 90 seats x 70% = 63 Train cars (rounded) = 45,000/63 = 714 E. Profit = After Tax Profit/Tax Rate = $750,000/70% = $1,071,42 New Contribution margin = $205 - $85 = $120 Breakeven Point in Passengers = (Fixed Costs + Profit)/Contribution Margin Per Unit = ($3,600,000 + $1,071,429)/($205 -