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

Airport Connection provides shuttle service between four hotels near a medical center and an international airport. Airport Connection 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 (1,440 fares)

$36,000

Variable costs

Fuel

$ 5,040

Tolls and parking

3,100

Maintenance

500

8,640

Contribution margin

27,360

Fixed costs

Salaries

13,000

Depreciation

1,300

Insurance

1,128

15,428

Net income

$11,932

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.

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