Exercise 5-11

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 months 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

1. Calculate the break-even point in dollars $_____________

2. Calculate the break-even point in fares # _______________

3. Without Calculations, Determine the contribution margin at the break-even point $ ______________