Chapter 5, Problem 5.11E

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.

E5-12 In 2016, Manhoff Company had a break-even point of $350,000 based on a selling price of $5 Der unit and fixed costs of $112.000. In 2017. the selling price and the variable