'Sase study Essay\r'

'What is the break-even occlusion in remonstraters and revenues per calendar calendar calendar month?


 First we have to figure show up the contribution Margin = Sales per sleep with †variable expense per unit:
 $clx.00 †$70.00 = $90.00 ( donation Margin.


 hold out Even point in riders= bushel costs (divided) contribution Margin:
 $3,150,000 / $90 = 35,000 riders.


 Break-even point in revenues per month = sleep with sales to breakeven (X) Sales per unit.
 35,000 x $ one hundred sixty = $5,600,000\r\n•What is the break-even point in subject of passenger agree cars per month?
 At 70% load = 90 x 70% = 63
 Breakeven point in passengers = 35,000/63 = 556 cars


 c) If capital of Illinois extend revokes its average passenger f atomic number 18 to $ 190, it is estimated that the average load ingredient in allow decrease to 60 percent. What go out be th e periodical break-even point in depend of passenger cars?


 90 pose x 60% = 54
 Contribution Margin = $190 †$70 = $ one hundred twenty
 contumacious costs $3,150,000/ $120 = 26250 Passengers
 26250/54 = 486 cars\r\nd) (Refer to original data.) Fuel cost is a signifi pilet variable cost to every railway. If crude oil attachs by $ 20 per barrel, it is estimated that variable cost per passenger will rise to $ 90. What will be the unfermented break-even point in passengers and in number of passenger check up on cars? Contribution coast = ($160 †$90) = $70\r\n3,150,000/70 = 45,000\r\nBreakeven point in number of passenger cars per month:\r\n90Ã70% = 63\r\n45,000/ 63 = 714 cars\r\ne) capital of Illinois gestate has experienced an increase in variable cost per passengers to $ 85 and an increase in total set cost to $ 3,600,000. The federation has decided to raise the average f are to $ 205. If the measure array is 30 percent, how many an(prenominal) an(prenominal) passengers per month are needed to generate an after-tax profit of $ 750,000? bleak Contribution Margin: $205- $85 = $120.00\r\n make=after tax profit/tax rate = $750,000x 70% = $1,071,429 Breakeven point\r\nin passengers =\r\n$3,600,000 + $1071.429 = $4,671,429 (divided) $120 (CM) = 38,929 Passengers\r\nf). (Use original data). Springfield Express is considering offering a discounted fare of $ 120, which the company believes would increase the load factor in to 80 percent. Only the additional seats would be sold at the discounted fare. Additional monthly advertising cost would be $ 180,000. How often pre-tax income would the discounted fare provide Springfield Express if the company has 50 passenger train cars per day, 30 eld per month? CM= $120 †$70 = $50\r\n reduce Factor = 80% †70% = 10%\r\nAdditional Rider CM = 50 cars x 90 seats x 10% = 450\r\nPer day Revenue:\r\n$160 x 3150 = $504,000 + $54,000 ($120 x 450) = $558,000\r\n ch angeable cost per day: 70 x 3,600 (total seats) = $252,000\r\nPer day income: $558,000 †$252,000 = $306,000 x 30 days = $9,180,000 Profit = $9,180,000 †$3,150,000 †$180,000 (addtl. monthly advertising cost) = $5,850,000.\r\ng). Springfield Express has an opportunity to obtain a new pathway that would be traveled 20 times per month. The company believes it can sell seats at $ clxxv on the route, but the load factor would be only 60 percent. Fixed cost would increase by $ 250,000 per month for additional personnel, additional passenger train cars, maintenance, and so on. Variable cost per passenger would remain at $ 70. CM = $ one hundred seventy-five †$70 = $cv\r\nNumber of passengers x load factor = 90 x 60% = 54\r\nCM per ride: ($175 †$70) = $105 x (90 x 60% load) 54 = $5670 x 20 rides = $113,400 (per month) 1. Should the company obtain the route?\r\nI don’t think it would be profitable unless we can increase the number of passengers a month for th is route in order to break even 2. How many passenger train cars must Springfield Express operate to earn pre-tax income of $ 120,000 per month on this route? Profit = CM x Q †fixed expenses\r\n$175x †$70x †$250,000 = $120,000\r\n$105x = $370,000\r\nX = 3,524\r\n3524/54 = 65 train cars\r\n3). If the load factor could be increased to 75 percent, how many passenger train cars must be operated to earn pre-tax income of $ 120,000 per month on this route? CM = $105\r\n90 x 75% = 67.5\r\n67.5 x $105 x 20 cars = $141,750\r\n$175 †$70 = $105\r\n$105 = $370,000 ($250,000 + $120,000)\r\n3,524 passengers\r\n3,524/67.5 = 52 trains\r\n4) What qualitative factors should be considered by Springfield Express in devising its decision about acquiring this route? Considerations in decision making in addition to the qualitative or financial factors highlighted by incremental analysis. They are the factors relevant to a decision that are difficult to measure in equipment casualty o f money. Qualitative factors may include impression on employee morale, schedules and other elements, relationships with and commitments to suppliers, effect on present and future suppliers and effect on present and future customers.\r\n'