Suppose you work for the Miniola Hills Bus Company. The business' ten buses made a total of 80 trips per day on 310 days last year, for a total of 350000 kilometres. Another year like last year will put the business out of business (and you out of a job!). Your boss has come to you for help. Last year, instead of earning a profit the business lost \(\$ 102000\), as shown below.

Your boss is considering the following two plans for improving the business' profitability:
- Plan A - change the bus routes and reduce the number of trips to 60 per day in order to reduce the number of kilometres driven.
- Plan B - sell bulk bus tickets (five for \(\$ 1.00\) ) and student passes ( \(\$ 2.50\) to use all week) in order to increase the number of passengers.
Required:
a Write your boss a memo discussing the effect that each of these plans might have on the costs and revenues of the bus company. Identify in your memo any assumptions you have made.
b If you were making this decision, what questions would you like answered before making the decision?

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Revenue from passengers (496 000 @ $0.50) Less operating costs: Depreciation on buses Garage rent Registrations, fees and insurance Maintenance Drivers' salaries Tyres Petrol and oil Loss $100 000 20 000 40 000 15 000 65 000 20 000 90 000 $ 248 000 (350 000) ($102 000)