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Black Limousine Services is a luxury taxi company that operates from the Charlesbourg airport. Management is presented with two alternative strategies: (1) to pay
Black Limousine Services is a luxury taxi company that operates from the Charlesbourg airport. Management is presented with two alternative strategies: (1) to pay the drivers on a per-ride basis or (2) pay every employee a fixed salary. Additional information follows: Strategy 1 Selling price per ride $30 Variable cost per ride $24 Fixed costs per year $350,000 Strategy 2 $30 $15 $1,700,000 A decision should be based on the expected number of rides per year. The problem is that this number cannot be anticipated with certainty. Which is the minimum number of rides in the year such that strategy (2) is the better choice?
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