Answers a) What is the break-even point in passengers and revenues per month? Passengers 35,000 Revenue $5,600,000 Calculations contribution margin per passenger =passenger fare $160 - variable cost per passenger $70 $90 Contribution margin per unit is the difference between the selling price per unit and the variable cost per unit break-even point in units (tickets sold) = Fixed costs $3,150,000 / Contribution margin per unit $90 35,000 break-even point in dollars =
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creation does not cannibalize sales from any other product in the product column, so if the price need to be carefully considered. Contribution Margin = Unit Price – Unit Variable Cost Break Even Analysis is the calculated to establish to see the amount of product a business has to put on the market in order to break even on that manufactured goods. It’s useful analysis to calculate the impact of diverse marketing decision. Calculating the contribution margin you have to subtract the unit variable
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passenger train car 90 Total train car needed 388.89 Total Cars Needed = Breakeven point in passengers per month / Number of seats per passenger train car At Average load factor (percentage of seats filled) 70% Break-even point in number of passenger train cars per month 556 Break-even point in number of passenger train cars per month = Total train cars needed / Load factor C: Average full passenger fare $190 Less: Average variable cost per passenger $(70) Contribution Margin per
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you’ll get better breaks, better vacations, and students retain knowledge better and longer. Firstly, students get better breaks. Students love breaks from school. At the beginning of the year, students have to wait till November for their first break and it’s only a week long. That’s too long of a wait. Spring break is no different. You only get a week off even though you wait forever for it. The breaks aren’t even but with year-round schooling, they are. You get a 15 day break each season. That’s
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Introduction Contribution margins tells us how to measure how sales affect net income or profits (Wild & Shaw, 2014).Andre has opened up is own barber shop and he wants me to help him figure out how many haircuts he needs in order to break even. For this problem I will use the contribution margin formula along with the breakeven point. First we want to extinguish what our revenues and variable expenses. The formula for contribution is Revenues – Variable Expenses. Revenue is the sales and variable
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drink 25% $6,515 Coffee 25% $6,515 Hot dogs 20% $5,212 Hamburgers 20% $5,212 Misc. snacks 10% $2,606 The break-even points for each of these items are found by computing the contribution to profit (profit margin) for each item and dividing this into the allocated fixed cost. These are shown in the next table: NUM="3"> Selling Var. Profit Percent Allocated Break even Item price cost margin revenue fixed cost volume Soft drink $1.50 $0.75 $0.75 25% 6515 8686.67 Coffee
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CHAPTER 9 Break-Even Point and Cost-Volume-Profit Analysis QUESTIONS 1. The variable costing income statement classifies costs by the way they behave. Variable costs are deducted from revenues to determine contribution margin and then fixed costs are deducted from contribution margin to determine operating profit. Break-even analysis involves a study of fixed costs, variable costs and revenues to determine the volume at which total costs equal total revenues. Hence, variable costing
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better identify the fixed, variable, and semi-variable costs associated with production of ÐŽÒGreat Heath.Ў¦ Once these costs were categorized Lee could determine how this would effect the cost of goods sold. Lee could then develop what the break- even volume that could be generated from a changing volume of sales. The case shows the assumptions that Lee High made with respect to variable as versus fixed costs in determining the cost of goods sold per unit . Lee High was able to develop decision
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The Lazy Mower: Is it really worth it? Questions: 1. Prepare a Pro Forma Statement showing the annual cash flows resulting from the Lazy Mower project. (See table on next page) 0 1 2 3 4 5 6 7 8 9 10 Sales (units) 30,000 34,000 38,800 38,000 36,000 36,000 35,500 35,000 34,500 34,000 Adjusted Sales Price 1,000 1,000
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Price – Unit Variable Cost = $9.00 – ($1.25 + $0.35 + $1.00) = $6.40 b) Break-even volume in CD units Total Fixed Costs = $275,000 + $250,000 = $525,000 Unit Break-even Volume = Total Fixed Costs/Contribution per unit = $525,000 - $6.40 = 82,031.25units Break-even volume in dollars Contribution Margin = (Unit selling price – unit variable cost) / unit selling price = ($9.00 – $2.60) / $9.00 = 0.7111 = 71.111% Break-even Dollar Volume = Total Fixed Costs / Contribution Margin = $525,000 / 0
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