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Financial Analysis and Break-Even Calculations for Springfield Express: A Case Study in Luxury Passenger Transportation

Description: This case study analyzes financials and break-even points for a luxury transportation company.

Sophia Johnson
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Financial Analysis and Break-Even Calculations for Springfield Express: A Case Study in LuxuryPassenger TransportationCase Study1Springfield Express is a luxury passenger carrier in Texas. All seats are first class, and thefollowing data are available:Number of seats per passenger train car90Average load factor (percentage of seats filled)70%Average full passenger fare$ 160Average variable cost per passenger$70Fixed operating cost per month$3,150,000Formula :Revenue = Units Sold * Unit priceContribution Margin = Revenue–All Variable CostContribution Margin Ratio = Contribution Margin/Selling PriceBreak Even Points in Units = (Total Fixed Costs + Target Profit )/Contribution MarginBreak Even Points in Sales = (Total Fixed Costs + Target Profit )/Contribution MarginRatioMargin of Safety = Revenue-Break Even Points in SalesDegree of Operating Leverage = Contribution Margin/Net IncomeNet Income = Revenue–Total Variable Cost–Total Fixed CostUnit Product Cost using Absorption Cost = (Total Variable Cost + Total Fixed Cost)/# of unitsa.Contribution margin per passenger=?Contribution margin ratio=?Break-even point in passengers = Fixed costs/Contribution Margin =Passengers =?Break-even point in dollars = Fixed Costs/Contribution Margin Ratio=$ ?b.Compute # ofseats per train car(remember load factor?)If you know # of BE passengersfor one train car and the grand total of passengers, you cancompute # of train cars(rounded)=?c.Contributionmargin=?Break-even point in passengers = fixed costs/ contribution marginPassengers=?train cars (rounded)=?d.Contribution margin =?Break-even point in passengers = fixed costs/contribution marginPassengers =?

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