Problem
Carriage Company offers guided horse-drawn carriage rides through historic Dalton, Georgia. The carriage business is highly regulated by the city. Counton Carriage Company has the following operating costs during April: (See Attachment). During April (a month during peak season), Counton Carriage Company had 13,500 passengers. Eighty percent of passengers were adults ($20 fare) while 20% were children ($12 fare). Requirements 1. Prepare the company's contribution margin income statement for the month of April. Round all figures to the nearest dollar. 2. Assume that passenger volume increases by 18% 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?
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Monthly depreciation expense on carriages and stable
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$2,200
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Fee paid to the City of Dalton
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15% of ticket revenue
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Cost of souvenir set of postcards given to each passenger
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$0.60/set of postcards
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Brokerage fee paid to independent ticket brokers (60% of tickets are issued through these brokers; 40% are sold directly by the Counton Carriage Company)
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$1.90/ticket sold by broker
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Monthly cost of leasing and boarding the horses
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54,000
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Carriage drivers (tour guides) are paid on a per passenger basis
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$3.90 per passenger
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Monthly payroll costs of non-tour guide employees
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7,550
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Marketing, website, telephone, and other monthly fixed costs
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7,250
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