Curt Carriage Company offers guided horse-drawn carriage rides through historic Charleston, South Carolina. The carriage business is highly regulated by the city. Curt Carriage Company has the following operating costs during April:
Monthly depreciation expense on carriages and stable............................................$2,000
Fee paid to the City of Charleston........................................................ 15% of ticket revenue
Cost of souvenir set of postcards given to each passenger.................$...0.95/set of postcards
Brokerage fee paid to independent ticket brokers (60% of tickets
are issued through these brokers; 40% are sold directly by................$1.80/ticket sold by.
the Curt Carriage Company) ..........................................................................................broker
Monthly cost of leasing and boarding the horses ........................................................$51,000
Carriage drivers (tour guides) are paid on a per passenger basis..............$3.40 per passenger
Monthly payroll costs of non-tour guide employees................................................... $7,600
Marketing, website, telephone, and other monthly fixed costs................................... $7,100
During April (a month during peak season), Curt 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 17% 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?