E22-8.

Compute break-even point.

(LO 3, 4)

Spencer Kars provides shuttle service between four hotels near a medical center and an international airport. Spencer Kars 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.

Fare revenues (1,500 fares)		$36,000
Variable costs
Fuel	$?5,040
Tolls and parking	3,100
Maintenance	860	9,000
Contribution margin		27,000
Fixed costs
Salaries	15,700
Depreciation	1,300
Insurance	1,000	18,000
Net income		$?9,000

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.