Casino Express Bus Lines (Client Review for a Business Consulting Firm)Casino Express Bus Lines provides transportation from several regional locations to Casino City. Casino Express operates 365 days a year and offers several convenient daily departure and return times to each of its five metropolitan stations. Each bus holds up to 100 passengers per trip. The company’s strategy is to offer comfortable, moderately priced transportation to this popular gaming destination. A round-trip ticket costs each passenger $28 from any location. Based on seasonal demand, the company is committed to offering 7,300 total round-trips next year. The company’s president estimates that each round-trip has $1,000 in costs related to fuel, vehicle rental fees, inspec-tions, driver salaries, highway tolls, and miscellaneous regulatory fees. Casino Express incurs the following costs per passenger ($10 total): soft drinks and snacks ($1), casino meal-discount vouchers ($4), and slot machine coins ($5). The bus line also incurs $200,000 each year for administration and marketing fixed costs.

Background Questions 

a. What is the contribution margin per passenger? 

b. Describe the cost structure of this company. Are they more heavily committed to fixed or variable costs?

c. What is the breakeven point for Casino Express? How many passengers per roundtrip are required to break even? How many passengers per round-trip are needed to earn $900,000 each year?

Answer rating: 100% (QA)

Step 1 Contribution margin is calculated through two ways Sales variable cost OR Fixed cost profit m... View the full answer