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##### DEVRY ACCT505 WEEK 3 CASE STYDY 1

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**Question**

Question;Case Study 1;Springfield Express is a luxury;passenger carrier in Texas. All seats are first class, and the following data;are available;Number;of seats per passenger train car 90;Average;load factor (percentage of seats filled) 70%;Average;full passenger fare;$ 160;Average;variable cost per passenger;$ 70;Fixed;operating cost per month;$3,150,000;Formula;Revenue = Units Sold * Unit price;Contribution Margin = Revenue ? All;Variable Cost;Contribution Margin Ratio = Contribution;Margin/Selling Price;Break Even Points in Units = (Total;Fixed Costs + Target Profit)/Contribution Margin;Break Even Points in Sales = (Total;Fixed Costs + Target Profit)/Contribution Margin Ratio;Margin of Safety = Revenue - Break Even;Points in Sales;Degree of Operating Leverage =;Contribution Margin/Net Income;Net Income = Revenue ? Total Variable;Cost ? Total Fixed Cost;Unit Product Cost using Absorption;Cost = (Total Variable Cost + Total;Fixed Cost)/# of units;a.;Contribution margin per;passenger =?;Contribution;margin ratio =?;Break-even;point in passengers = Fixed costs/Contribution Margin =;Passengers =?;Break-even;point in dollars = Fixed Costs/Contribution Margin Ratio =;$?;b.;Compute # of seats per train;car (remember load factor?);If you know #;of BE passengers for one train car and the grand total of passengers, you can;compute # of train cars (rounded) =?;c.;Contribution margin =?;Break-even;point in passengers = fixed costs/ contribution margin;Passengers =?;train cars (rounded) =?;d.;Contribution margin =?;Break-even;point in passengers = fixed costs/contribution margin;Passengers =?;train cars (rounded) =?;e.;Before tax profit less the tax;rate times the before tax profit = after-tax income = $?;Then, proceed;to compute # of passengers -=?;f.;# of discounted seats =?;Contribution;margin for discounted fares X #;discounted seats = $ each train X$? train cars per day X? days per month= $? minus $ additional fixed costs = $? pretax income.;g.;1.;Compute Contribution;margin;Then;# seats X $ X;# train cars = $?;Increased;fixed cost;(?);Pretax gain (loss);on new route $;2 and 3. Compute # of passengers and train cars using;computation approaches employed in some of the above problems.;4.;Springfield should consider such things as (Think of qualitative factors that;are important. In other words, not the;numbers but other things that have to be considered, e.g., risks)

Paper#40732 | Written in 18-Jul-2015

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