Carriage Company offers guided horse-drawn carriage rides through historic Charleston, South Carolina. The carriage business is highly regulated by the city. Carlton Carriage Company has the following operating costs during April: During April (a month during peak season) Carlton Carriage Company had 12,990 passengers. Eighty-five percent of passengers were adults

($23 fare) while 15% were children ($15 fare).

DATA TABLE:

Monthly depreciation expense on carriages and stable. . . . . . .$2,400

Fee paid to the City of Charleston. . . . . . . . . . . . . 15% of ticket revenue

Cost of souvenir set of postcards given to each passenger. . . . . . .$0.75/set of postcards

Brokerage fee paid to independent ticket brokers (60% of tickets are issued through these brokers; 40% are sold directly by the Carlton Carriage Company). . . . . . $1.60/ticket sold by broker

Monthly cost of leasing and boarding the horses. . . . . . . . . . . .$53,000

Carriage drivers (tour guides) are paid on a per passenger basis. . . . . . . . . . . $3.30 per passenger

Monthly payroll costs of non-tour guide employees. . . . . . . . . . . . . . . . .$7,550

Marketing, Web site, telephone, and other monthly fixed costs. . . . . . . . . . . . . . . . . . . . $7,450

Requirements

1.	Prepare the company's contribution margin income statement for the month of April. Round all final figures to the nearest dollar.
2.	Assume that passenger volume increases by 20% in May. Which figures on the income statement would you expect to change, and by what percentage would they change? Which figures would remain the same as in April?

Requirement 1. Prepare the company's contribution margin income statement for the month of April. (Do not round interim calculations or amounts. Round all amounts input in the table to the nearest dollar. Check your spelling carefully and do not abbreviate.)

Carlton Carriage Company
Contribution Margin Income Statement
For the month ended April 30

Requirement 2. Assume passenger volume increases by

2020%

in May. Which figures on the income statement would you expect to change and by what percentage would they change? If passenger volume increases by

2020%

in May, we would expect

all

few

most

fixed

mixed

variable

expenses to

decrease by

increase by

2020%.

This is because

fixed

mixed

variable

costs change in direct proportion to changes in volume. As a result, the

contribution margin

fixed expenses

operating income

would

decrease by

increase by

2020%.

Which figures would remain the same as in April?

Assuming that a

2020%

increase in volume is still in the same relevant range, we would expect

all

few

most

fixed

mixed

variable

costs to remain at their present level.

Enter any number in the edit fields and then continue to the next question.