Question
Charleston Carriage Company offers guided horse-drawn carriage rides through historic Charleston, South Carolina. The carriage business is highly regulated by the city. The fare for
Charleston Carriage Company offers guided horse-drawn carriage rides through historic Charleston, South Carolina. The carriage business is highly regulated by the city. The fare for all passengers is $19.50. Charleston Carriage has the following monthly operating costs:
Fee paid to the city of Charleston | 17% of ticket revenue |
Cost of souvenir set of postcards given to each passenger | $0.40 per set |
Monthly cost of leasing and boarding the horses | $50,000 |
Carriage drivers (tour guides) are paid on a per-passenger basis | $2.90 per passenger |
Monthly payroll costs of non tour guide employees | $8,000 |
Marketing, web-site, telephone, and other monthly fixed costs | $8,000 |
In addition to these costs, Charleston Carriage pays a brokerage fee of $1.10 per ticket sold by brokers. On average, 60% of tickets are issued through these brokers; 40% are sold directly by Charleston Carriage. Charleston Carriage has several questions about its monthly revenues, costs, and profits in 2017.
NOTE: use $12.22 for the estimated contribution margin per passenger and $66,000 for the estimated monthly fixed costs
1. How many monthly passengers would be required for Charleston Carriage to earn $92,000 per month in 2017? (Last chegg answer gave me the incorrect answer $16638)
2. Assuming a tax rate of 33%, what must revenue be in order for Charleston Carriage to earn $92,000 per month in 2017? (Last chegg answer gave me the incorrect answer $137313, it said "the answer you submitted is the after-tax profit goal, but the question is asking for the revenue that is necessary to reach that goal")
3. Charleston Carriage has an opportunity to negotiate with the company that leases the horses and boards them. If Charleston Carriage expects to sell 6,401 tickets per month in 2017, what's the most it could pay to lease and board the horses if it wants to break even each month (ignoring taxes)? (Last chegg answer gave me the incorrect answer $20220)
Thank you
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