Question 11

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 (1,340 passengers)				$37,520
Variable costs
Fuel		$5,673
Tolls and parking		2,739
Maintenance		968		9,380
Contribution margin				28,140
Fixed costs
Salaries		12,700
Depreciation		2,100
Insurance		2,000		16,800
Net income				$11,340

(b)

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

Contribution margin at the break-even point

$

Break Even Point in Dollars - $22,400

Break Even Number of Passengers - 800