Kare Kars provides shuttle service between four hotels near a medical center and an international airport. Kare 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.
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Fare revenues (1,400 fares)
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$30,800
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Variable costs
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Fuel
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$5,544
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Tolls and parking
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2,772
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Maintenance
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924
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9,240
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Contribution margin
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21,560
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Fixed costs
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Salaries
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11,127
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Depreciation
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1,047
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Insurance
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916
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13,090
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Net income
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$8,470
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(a) Calculate the break-even point in (1) dollars and (2) number of fares.
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(1)
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Break-even point
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$
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(2)
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Break-even point
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$
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fares
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(b) Without calculations, determine the contribution margin at the break-even point.
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Contribution margin at the break-even point
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$
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