1252 Words6 Pages

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.
b. What is the break-even point in number of passenger train cars per month?
The break-even point in number of passenger train cars per month is calculated below:
90 * 70% = 63 is the break-even average passenger per car.
35,000 / 63 = 555.55 556 is break-even point in number of passenger train cars per month.
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?
To find the monthly break-even point in number of passenger cars if Springfield Express raises its average passenger fare to $190.00 and the estimation that the average load factor will decrease to 60%, the following calculation is provided:
$3,150,000 / $120.000 = $26,250 is the break-even in passengers.
90 / 60% = 54 is the average passenger per car.
$26,250 / 54

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