(a) BEP = Fixed cost / Contribution per Unit Contribution per Unit = Sales price per unit - Variable

Costs per unit = $160 - $70 = $90 BEP = $3,150,000 / $90 = 35,000

BEP in passengers is 35,000.

BEP in Revenues per month is = Break even point * selling price = 35,000 * 160 = $5,600,000

(b) The break-even point per passenger is 35,000 and the no of passengers per train car is 90*0.7 = 63. Therefore the BEP in no. of passenger train cars per month is = 35,000 / 63 = 556 rounded up. (c) BEP per passenger is = Fixed cost / Contribution per Unit Contribution per Unit = Sales price per unit - Variable Costs per unit = $190 - $70 = $120 BEP per passenger is = $3,150,000 / $120 = 26,250

The no. passengers per train car is 90*0.6 = 54 Therefore the BEP in no. of passenger train cars per month is = 26,250 / 54 = 486.11

(d) BEP per passenger is = Fixed cost / Contribution per Unit Unit contribution = Sales price per unit - Variable Costs per unit = $160 - $90 = $70

BEP per passenger is = $3,150,000 / $70 = 45,000

The no. passengers per train car is 90*0.7 = 63 Therefore the BEP in no. of passenger train cars per month is = 45,0000 / 63 = 714

(e) Profit - Profit * .3 = after tax profit Profit = after tax profit / .7 = 1,071,428

Unit Sales = (Fixed Costs + Profit) / (Selling Price per Unit - Variable Costs per Unit) = (3,600,000 + 1,071,428) / (205 - 85) = 38,928.56 passengers.

38,929 passengers are needed per month to generate $750,000 after-tax profit.

(f) Number of seats 90 Number of seats sold at normal fare $160 are 90*.7 = 63 Number of seats sold at discount fare 120 are 90 * (80%-70%) = 90 * .1 = 9

Additional sales revenue

= Num. seats * disc. fare * 50 train cars per day * 30 days

= 9 * 120 * 50 * 30 = $1,620,000

Total sales = 63*160*50*30 + 9*120*50*30 = 16,740,000

Additional Variable cost = (9) * 50 * 30 * $70 + 180,000 = 945,000 + 180,000 = 1,125,000 Additional Pretax Income = 1,620,000 - 1,125,000 - 180,000 = 495,000

(g) 1. Cm per unit=175-70=105 Cm ratio=105/175=.60

Break even sales =3,400,000/.60 = $5,666,666 No the company should not acquire the new route. With only 60% of passengers riding, but incurring an increase in costs. It would take too many routes in order for the company to actually make a profit. 2. Profit + Fixed Expenses = Unit CM x Q Q = (Profit + Fixed Expenses) / (unit CM) = (250,000 + 120,000) / ((.6 x 90) x (175 - 70)) = 66 Rounded.

3. 4.

Q = (250,000 + 120,000) / (.75 x 90) x (175 - 70) = 53 rounded. The main factor is the load factor.