# Break Even Point Analysis

370 Words2 Pages
A. What is the break-even point in passengers and revenue per month? Contribution cost 160-70= \$90.00 per passenger Break-even point in passengers is: \$3,150,000 Fixed operating cost/\$90.00 Contribution margin cost per passenger = 35,000 break-even point in passengers. What is the Break-even point in revenues per month? 3,150,000.00 in fixed cost/0.5625 Contribution Margin Ratio (\$90/\$160)=5,600,000 B. Break-even point in number of passengers in passenger cars per month? Average number of seats = 90*70%=63 seats per train car. Break-even point is 35,000/63 average load of passengers= 555.55 rounded to 556 passengers is the break-even point of passengers in a passenger car per month. C. If Springfield 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 cost would be 190-70=120 per passenger. 90 seats with 60% load factor would be 54 seats. 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? Contribution Margin \$160.00-\$90.00=\$70.00 Fixed operating cost \$3,150,000/\$70=45,000 passengers break-even point 45,000 passengers/63 average load factor=714 passenger train car break-even point. E. Springfield Express has experienced an increase in variable cost per passenger to \$ 85 and an increase in total fixed cost to \$ 3,600,000. The company has decided to raise the average fare to \$ 205. If the tax rate is 30 percent, how many