Sase study Essay

What is the break-even full point in passengers and revenues per month? First we have to figure out the portion Margin = Sales per fare variable expense per unit $ one hundred sixty.00 $70.00 = $90.00 ( percentage Margin. Break Even point in passengers= Fixed costs (divided) contribution Margin $3,150,000 / $90 = 35,000 passengers. Break-even point in revenues per month = Fare gross revenue to breakeven (X) Sales per unit. 35,000 x $160 = $5,600,000What is the break-even point in number of passenger train cars per month? At 70% load = 90 x 70% = 63 Breakeven point in passengers = 35,000/63 = 556 cars c) If capital of Illinois Express raises its average passenger fare to $ 190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars? 90 seats x 60% = 54 Contribution Margin = $190 $70 = $long hundred Fixed costs $3,150,000/ $120 = 26250 Passengers 26250/54 = 486 carsd) (Refer to original data.) Fuel cost is a significant variable cost to any railway. If archaic oil amplifys by $ 20 per barrel, it is estimated that variable cost per passenger will rise to $ 90. What will be the new break-even point in passengers and in number of passenger train cars? Contribution margin = ($160 $90) = $703,150,000/70 = 45,000Breakeven point in number of passenger cars per month9070% = 6345,000/ 63 = 714 carse) Springfield Express has experienced an summation in variable cost per passengers to $ 85 and an increase in total fixed cost to $ 3,600,000. The social club has decided to raise the average fare to $ 205. If the tax revenue rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 750,000? New Contribution Margin $205- $85 = $120.00 gather=after tax profit/tax rate = $750,000x 70% = $1,071,429 Breakeven pointin passengers =$3,600,000 + $1071.429 = $4,671,429 (divided) $120 (CM) = 38,929 Passengersf). (Use original data). Springfield Expre ss is considering offering a discounted fare of $ 120, which the company believes would increase the load factor to 80 percent. Only the additional seats would be sold at the discounted fare. supernumerary monthly advertising cost would be $ 180,000. How much pre-tax income would the discounted fare provide Springfield Express if the company has 50 passenger train cars per day, 30 days per month? CM= $120 $70 = $50Load Factor = 80% 70% = 10%Additional Rider CM = 50 cars x 90 seats x 10% = 450Per day Revenue$160 x 3150 = $504,000 + $54,000 ($120 x 450) = $558,000Variable cost per day 70 x 3,600 (total seats) = $252,000Per day income $558,000 $252,000 = $306,000 x 30 days = $9,180,000 Profit = $9,180,000 $3,150,000 $180,000 (addtl. monthly advertising cost) = $5,850,000.g). Springfield Express has an opportunity to obtain a new despatch that would be traveled 20 times per month. The company believes it can sell seats at $ 175 on the route, but the load factor would be only 60 p ercent. Fixed cost would increase by $ 250,000 per month for additional personnel, additional passenger train cars, maintenance, and so on. Variable cost per passenger would proceed at $ 70. CM = $175 $70 = $105Number of passengers x load factor = 90 x 60% = 54CM per ride ($175 $70) = $105 x (90 x 60% load) 54 = $5670 x 20 rides = $113,400 (per month) 1. Should the company obtain the route?I dont think it would be profitable unless we can increase the number of passengers a month for this route in swan to break even 2. How many passenger train cars moldiness Springfield Express operate to piddle pre-tax income of $ 120,000 per month on this route? Profit = CM x Q fixed expenses$175x $70x $250,000 = $120,000$105x = $370,000X = 3,5243524/54 = 65 train cars3). If the load factor could be increased to 75 percent, how many passenger train cars must be operated to earn pre-tax income of $ 120,000 per month on this route? CM = $10590 x 75% = 67.567.5 x $105 x 20 cars = $141,750$17 5 $70 = $105$105 = $370,000 ($250,000 + $120,000)3,524 passengers3,524/67.5 = 52 trains4) What soft factors should be considered by Springfield Express in making its decision about acquiring this route? Considerations in decision making in addition to the qualitative or financial factors highlighted by incremental analysis. They are the factors relevant to a decision that are difficult to measure in terms of money. soft factors may include stamp on employee morale, schedules and other elements, relationships with and commitments to suppliers, effect on present and future suppliers and effect on present and future customers.