Question

Chartrand Carriage Company offers guided horse-drawn carriage rides through historic old
Montreal. The carriage business is highly regulated by the city. Chartrand Carriage Company has the following operating costs during April:
Monthly depreciation expense on carriages and stable............................ $2,900
Fee paid to the City of Montreal....................................... 15% of ticket revenue
Cost of souvenir set of postcards given to each passenger ....... $0.75/set of postcards
Brokerage fee paid to independent ticket brokers (60% of tickets are issued through
these brokers; 40% are sold directly by the
Chartrand Carriage Company)............................................... $1.20/ticket sold by broker
Monthly cost of leasing and boarding the horses......................................... $48,000
Carriage drivers (tour guides) are paid on a per passenger basis...... $3.00 per passenger
Monthly payroll costs of non–tour guide employees .............................. $7,500
Marketing, website, telephone, and other monthly fixed costs................... $7,250
During April (a month during peak season) Chartrand Carriage Company had 12,970 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 18% 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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  • CreatedApril 30, 2015
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