Exercise 5-11 (Video)

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

Sales (1,400 passengers)				$36,400
Variable costs
Fuel		$4,077
Tolls and parking		2,507
Maintenance		696		7,280
Contribution margin				29,120
Fixed costs
Salaries		11,000
Depreciation		1,300
Insurance		4,860		17,160
Net income				$11,960

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Calculate the break-even point in dollars.

Break-even point

$

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Calculate the break-even point in number of passengers.

Break-even point

passengers

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Without calculations, determine the contribution margin at the break-even point.

Contribution margin at the break-even point

$

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