Bay Area Limos operates transportation services to Bay City airport. The price of service is fixed at a flat rate for each trip and most costs of providing the service are fixed for each trip. Betty Smith, the owner, forecasts income by estimating two factors that fluctuate with the economy: the fuel cost associated with the trip and the number of customers who would take trips. Looking at next year, Betty develops the following estimates of contribution margin (price less variable costs, including fuel) for the estimated number of customers. For simplicity, she assumes that the fuel costs (therefore the contribution margin per ride) and the number of customers are independent.

In addition to the costs of a ride, Betty estimates that other service costs are $45,000 plus $5 for each customer (ride) in excess of 3,000 rides. Annual administrative and marketing costs are estimated to be $20,000 plus 10 percent of the contribution margin.
Required
Use a spreadsheet to prepare an analysis of the possible operating income for Bay Area Limos similar to that in Exhibit 13.5. What is the range of possible operatingincomes?

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Contribution Margin per Ride (Price Variable cost) Number of Customers Scenario $50 30 20 Excellent. air .---.. - Poor 4,800 3,000 2,000