Question

Hatcher Carriage Company offers guided horse- drawn carriage rides through historic Columbus, Georgia. The carriage business is highly regulated by the city. Hatcher Carriage Company has the following operating costs during April:
Monthly depreciation expense on carriages and stable............... $ 2,100
Fee paid to the City of Columbus............................................ 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 thesebrokers; 40% are sold directly by the Hatcher Carriage Company)........... $ 1.50/ 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........... $ 3.80 per passenger
Monthly payroll costs of non– tour guide employees........................ $ 7,500
Marketing, website, telephone, and other monthly fixed costs......... $ 7,400

During April (a month during peak season), Hatcher Carriage Company had 13,050 passengers. Eighty- five percent of passengers were adults ($ 21 fare) while 15% were children ($ 13 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 10% 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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