Question

Carter Carriage Company offers guided horse- drawn carriage rides through historic Charlotte, North Carolina. The carriage business is highly regulated by the city. Carter Carriage Company has the following operating costs during April:
Monthly depreciation expense on carriages and stable........................ $ 2,100
Fee paid to the City of Charlotte........................................................... 15% of ticket revenue
Cost of souvenir set of postcards given to each passenger.................. $ 0.85/ set of postcards
Brokerage fee paid to independent ticket brokers (60% of tickets
are issued through these brokers; 40% are sold directly by the Carter Carriage Company)................................................................. $ 1.00/ ticket sold by broker
Monthly cost of leasing and boarding the horses.................................. $ 53,000
Carriage drivers (tour guides) are paid on a per passenger basis......... $ 3.90 per passenger
Monthly payroll costs of non– tour guide employees............................. $ 7,500
Marketing, Website, telephone, and other monthly fixed costs........... $ 7,300

During April (a month during peak season), Carter Carriage Company had 13,040 passengers. Eighty- five percent of passengers were adults ($ 26 fare) while 15% were children ($ 18 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 20% 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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  • CreatedAugust 27, 2014
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