Carter Carriage Company offers guided horse- drawn carriage rides through historic Charlotte, North Carolina. The carriage business is highly regulated by the city. Carter Carriage Company has the following operating costs during April:

Monthly depreciation expense on carriages and stable........................ $ 2,100

Fee paid to the City of Charlotte........................................................... 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 these brokers; 40% are sold directly by the

Carter Carriage Company)................................................................. $ 1.00/ ticket sold by broker

Monthly cost of leasing and boarding the horses.................................. $ 53,000

Carriage drivers (tour guides) are paid on a per passenger basis......... $ 3.90 per passenger

Monthly payroll costs of non– tour guide employees............................. $ 7,500

Marketing, Website, telephone, and other monthly fixed costs........... $ 7,300

During April (a month during peak season), Carter Carriage Company had 13,040 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 20% 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?