Chapter 6, Problem 6.37AE

Prepare a contribution margin income statement (Learning Objective 6)

Charleston Carriage Company offers guided horse-drawn carriage rides through historic Greenville, South Carolina. The carriage business is highly regulated by the city. Charleston Carriage Company has the following operating costs during April:

Monthly depreciation expense on carriages and stable	$2,900
Fee paid to the City of Greenville	10% of ticket revenue
Cost of souvenir set of postcards given to each passenger	$0.55/set of postcards
Brokerage fee paid to independent ticket brokers (60% of tickets are issued through these brokers; 40% are sold directly by the Charleston Carriage Company)	$1,40/ticket sold by broker
Monthly cost of leasing and boarding the horses	$48,000
Carriage drivers (tour guides) are paid on a per passenger basis	$3.90 per passenger
Monthly payroll costs of non-tour guide employees	$7,600
Marketing, website, telephone, and other monthly fixed costs	$7,350

6.2-6.9 Full Alternative Text

During April (a month during peak season), Charleston Carriage Company had 13,400 passengers. Eighty percent of passengers were adults ($20 fare) while 20% were children ($12 fare).

Requirements

1. 1. Prepare the company’s contribution margin income statement for the month of April. Round all figures to the nearest dollar.
2. 2. Assume that passenger volume increases by 19% in May. Which figures on the income statement would you expect to change, and by what percentage would they change? Which figures would remain the same as in April?