Classic Limo, Inc., provides limousine service to Tri-Cities airport. The price of the service is fixed at a flat rate for each trip and most costs of providing service are stable for each trip. Marc Pence, the owner, budgets income by estimating two factors that fluctuate with the economy: the fuel cost associated with each trip and the number of customers who will take trips. Looking at next year, Marc develops the following estimates of contribution margin (price less variable cost of the trip, including fuel) and for the estimated number of customers. Although Marc understands that it is not strictly true, he assumes that the cost of fuel and the number of customers are independent.

Contribution Margin per RideScenario(Price - Variable cost)Number of CustomersExcellent$455,500Fair352,800Poor202,200

Classic Limo, Inc., provides limousine service to Tri-Cities airport. The price of the service is fixed at a flat rate for each trip and most. costs of providing service are stable for each trip. Marc Pence, the owner, budgets income by estimating two factors that fluctuate with Exhibit 13.15 Spreadsheet Analysis of Alternative Budgeting he economy: the fuel cost associated with each trip and the number of customers who will take trips. Looking at next year, Marc develops the following estimates of contribution margin (price less variable cost of the trip, including fuel) and for the estimated number of customers. Although Marc understands that it is not strictly true, he assumes that the cost of fuel and the number of Scenarios customers are independent. Contribution Margin per Ride (Price - Variable Number of Scenario Excellent cost) Customers O O LL $45 5,500 Fair 2,800 Poor 2, 206 Sales Cost of Gross Marketing Operating Quantity Revenue Goods Sold Margin & Admin Profit In addition to the costs of a ride, Marc estimates that other service costs are $42,000 plus $6 for each customer (ride) in excess of 2.800 rides. Annual administrative and marketing costs are estimated to be $20,000 plus 10 percent of the contribution margin. 225,000 $5.625,000 $3,712,500 $1,912,500 $1.652,250 $260,250 Required: Prepare an analysis of the possible operating income for Classic Limo, Inc., similar to that in Exhibit 13.15. What is the range of possible 225,000 $6,750,000 $3,712,500 $3,037,500 $1,652,250 $1,385,250 operating incomes? 225,000 $7.875.000 $3,712,500 $4, 162,500 $1,652,250 $2,510,250 Contribution Number of Total Operating Margin Customers Contribution Service Marketing & Margin Costs Admin Profit (Loss) 240,000 $6,000,000 $3,960,000 $2,040,000 $1 686.000 $354.000 CamScanner Poor 2,200 so 240.000 $7.200.000 $3.960.000 $3,240,000 $1.686.000 $1,554,000 Fair 2,200 Excellent 2,200 240,000 $8,400.000 $3.960.000 $4.440.000 $1.686.000 $2,754.000 Poor $ . 2,800 Fair 2,800 260,000 $6,500.000 $4.290,000 $2,210.000 $1.731.000 $479.000 Excellent 45 2,800 260,000 $7.800,000 $4,290,000 $3,510.000 $1.731.000 $1,779.000 Poor 5,500 Fair 5,500 260.000 $9. 100.000 $4.290.000 $4,810.000 $1.731.000 $3.079.000 Excellent 45 5,500