Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

How to get the answers of PartB Q6 and PartC Q7? Charleston Carriage Company offers guided horse-drawn carriage rides through historic Charleston, South Carolina. The

How to get the answers of PartB Q6 and PartC Q7?

Charleston Carriage Company offers guided horse-drawn carriage rides through historic Charleston, South Carolina. The company shut down in 2020 because of the Covid virus, and it doesn't expect to resume business until next year, 2022. The carriage business is highly regulated by the city, and the expected fare for all passengers in 2022 is $19.50. The company budgets the following monthly operating costs for 2022:

Fee paid to the city of Charleston 17% of ticket revenue
Cost of souvenir set of postcards given to each passenger $0.50 per set
Monthly cost of leasing and boarding the horses $45,000
Carriage drivers (tour guides) are paid on a per-passenger basis $3.00 per passenger
Monthly payroll costs of non tour guide employees $7,500
Marketing, web-site, telephone, and other monthly fixed costs $7,000

In addition to these costs, Charleston Carriage will have to pay a brokerage fee of $1.10 per ticket sold by brokers. On average, 65% of all tickets sold are sold by brokers; 35% are sold directly by Charleston Carriage. Charleston Carriage has several questions about its expected monthly revenues, costs, and profits in 2022.

Part B [8 tries; 8 points] 3. What is Charleston Carriage's estimated monthly operating income in 2022 if the number of monthly passengers is 8,600? 43442 4. How many monthly passengers would be required for Charleston Carriage to break even in 2022? 4971 5. How many monthly passengers would be required for Charleston Carriage to earn $110,000 per month in 2022? 14160 6. Assuming a tax rate of 31%, what must ticket revenue be in order for Charleston Carriage to earn $110,000 per month in 2022?

Part C [4 tries; 4 points] 7. Charleston Carriage has an opportunity to negotiate with the company that leases the horses and boards them. If Charleston Carriage expects to sell 5,971 tickets per month in 2022 and wants to break even each month, what's the most it could pay per month to lease and board the horses (ignoring taxes)?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: David Spiceland

6th Edition

1265889716, 978-1265889715

More Books

Students also viewed these Accounting questions

Question

What does friendship mean to you?

Answered: 1 week ago

Question

Carry out an interview and review its success.

Answered: 1 week ago