Airport Connection provides shuttle service between four hotels near a medical center and an international airport. Airport Connection 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.

Instructions

(a) Calculate the break-even point in (1) dollars and (2) number of fares.

(b) Without calculations, determine the contribution margin at the break-even point.

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Fare revenues (1,440 fares) Variable costs Fuel Tolls and parking Maintenance Contribution margin Fixed costs Salaries Depreciation Insurance Net income $36,000 $ 5,040 3,100 500 8,640 27,360 13,000 1,300 1,128 15,428 $11,932