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Looking at the case study for Springfield express,...




Looking at the case study for Springfield express, can you explain how the # of passengers 120 was dervived? The original data had 90 as the number of seats per passenger car. Original data 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 part g Springfield Express has an opportunity to obtain a new route 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 percent. 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 remain at $ 70. Should the company obtain the route? Contribution Margin Per Ride = (Sales Price ? VC) * (Number of Passengers * Load Factor) Contribution Margin Per Ride = ($175 - $70) * (120 * 60%) Contribution Margin Per Ride = $7,560


Paper#8127 | Written in 18-Jul-2015

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