Lappin Community Transit (LCT) is a not-for-profit mostly volunteer organization that provides transportation to seniors. As a not-for-profit, it refers to an excess of revenues over costs as a “surplus” and an excess of costs over revenues as a “deficit.” LCT prices a round-trip ticket to downtown at $2.25 per trip. The variable costs of a ride are $4.00. The fixed costs of LCT, primarily for its paid staff and van leases, are $75,000 annually. The town of Lappin provides LCT with a flat subsidy, partially funded by downtown merchants, of $120,000 annually plus a per-trip subsidy of $0.25.

Required

a. What is the break-even point for LCT in terms of number of round-trip tickets sold?

b. The director of LCT expects 21,000 riders this year and asks you if it will operate at a surplus or deficit. What is your answer?