Datsun Kars provides shuttle service between four hotels near a medical center and an international airport. Datsun Kars uses two 10-passenger vans to offer 12 round trips per day.
A recent month's activity in the form of a cost-volume-profit income statement is shown below.
|Fare revenues ( 1,500 fares)||$ 36,000|
|Tolls and parking||3,100|
|Net income||$ 9,000|
1. Calculate the break-even point in dollars.
|Break-even point||$ _|
2. Calculate the break-even point in number of fares.
(Round answer to 0 decimal places, e.g. 5,275.)
3. Without calculations, determine the contribution margin at the break-even point.
|Contribution margin at the break-even point||$ _|
Breakeven analysis is a management accounting tool that uses a company's cost, volume, and profit in order to create sound business decisions.
Answer and Explanation:
1. Breakeven point in dollars is calculated by using the formula below:
- BEP in dollars = Fixed costs / Contribution margin ratio
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from Financial Accounting: Help and ReviewChapter 5 / Lesson 28