Ronice M. Bruce Week 3_Course Project A - CASE STUDY
ACCT 505- Prof Main
January 26, 2013

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? Fixed cost | $ 3,150,000 | | Selling price | $ 160 | | Variable cost | $ 70 | | Break-even (Passengers) | 35,000 | BE (Passengers) = Fixed cost/ (Selling price – Variable Cost) …show more content…

| Current | Discounted | | Number of passengers | 63 | 9 | Current Passengers = Current Load x Number of seats per passenger car = 70% x 90 = 63Discounted Passengers = Increase Load x Number of seats per passenger car – Current passengers = 80% x 90 – 63 = 9 | Fare | 160 | 120 | | Total Revenue | 10,080 | 1,080 | Total Revenue (current) = # of passengers (current) x fare (current) = 63 x 160 = 10,080Total Revenue (discounted) = # of passengers (discounted) x fare (discounted) = 9 x 120 = 1, 080 | Number of Cars | 1,620 | 1,620 | 54 x 30 | | | | | Total revenue of Passengers | 18,076,200 | Total Revenue of Passengers =[( # of Current Passengers x current Fare) x # of Cars] + [(# of Discounted Passengers x Discounted Fare) x # of Cars] = [(63 x 160) x 1620] + [(9 x 120) x 1620] = [10,080 x 1620] + [1,080 x 1620] = [16,329,600] + [1,749,600] = 18, 076,200 | Variable Expenses | 8,920,800 | Variable Expenses = [Load x # of Current Passengers x Current Fare] + [Load x # of Discounted