Question

Quebec City Carriage Company offers guided horse-drawn carriage rides through historic Quebec City. The carriage business is highly regulated by the city. Quebec City Carriage Company has the following operating costs during April:
Monthly depreciation expense on carriages and stable............................................ $2,000
Fee paid to Quebec City.......................................................................................... 15% of ticket revenue
Cost of souvenir set of postcards given to each passenger....................................... $0.50/set of postcards
Brokerage fee paid to independent ticket brokers (60% of tickets are issued through
these brokers; 40% are sold directly by the Quebec City Carriage Company).......... $1.00/ticket sold by broker
Monthly cost of leasing and boarding the horses..................................................... $45,000
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................................ $7,000
During April (a month during peak season) Quebec City Carriage Company had 12,960 passengers. Eighty-five percent of passengers were adults ($20 fare) while 15% were children ($12 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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  • CreatedApril 30, 2015
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