Based on the info below please Explain how you will use 2 activity levels from your Budgeted Income Statement and 2 scenarios from your Cost-Volume-Profit analysis to make internal business decisions. The company is a limousine service business. Liveries are licensed public passengers that charge a rate of fare which is not based on a meter. Livery rides and fares must be prearranged. Also the livery driver needs to have a livery chauffeur license which must be renewed every 2 years. Selling price for service. Company offers 3 tipes of ride services: a)in the city from point to point service is $90; b) from/to airport transfer to/from city service is $120; c) hourly charter is $85/h and requires a 2 hours minimum charter. The Breakeven analysis.

Type 1= transfer to/from city to/from airport Type 2: -transfer in the city from point-to-point Type 3: hourly charter

First of All label the costs based on general nature of costs as variable or fixed cost mixed cost is ignored to keep things simple here in this case.

Expenses		Label
Advertising	500	FC
Airport stamps	840	VC
Amortization
Car wash	665	VC
City tax	337	FC
Depreciation	8,698	FC
Dues and Subscriptions	73	VC
Ground transportation	406	VC
I pass	500	VC
Independent contractor-loan	14,900	FC
Interest	3,001	FC
Insurance	3,784	FC
Fuel	14,225	VC
Legal and professional fees	1,180	FC
License and registration fees	648	FC
Miscellaneous-meetings	935	VC
Office expense	2,025	VC
Rent
Repairs and Maintenance	1,122	VC
Supplies	2,816	VC
Telephone	2,100	VC
Travel
Utilities	550	FC
Uniform	724	FC
Wages	45,000	VC
Total Expenses	105029

Total Variable Expenses are =70,707

Total Fixed Costs =34,322

Prices of Services		Sales Mix
Type 1	90	50.00%
Type 2	120	40.00%
Type 3	85	10.00%
	295
Total Variable Costs	70,707
Total Fixed Costs	34,322
	105,029
		%
Total Sales(Revenues)	132,592	100.00%
Variable Costs	70,707	53.33%
Contribution Margin	61,885	46.67%
Less: Fixed Costs	34,322	25.89%
Operating Income	27,563	20.79%
Break Even Point in Sales (Revenue)	$73,537	Breakeven In quantity for types
Breakeven point in Type 1 ($)	$36,768	409
Breakeven point in Type 2 ($)	$29,415	245
Breakeven point Type 3 ($)	$7,354	87
		740
Break Even Point in Q of sales mix	740

A Cost-Volume-Profit analysis for the purpose of future decision making to reach your goal of becoming a successful business. Consider at least 4 changes in the price/cost structure and include the numerical analysis.

• Change one Fixed Cost changed to $80,000

Prices of Services		Sales Mix
Type 1	90	50.00%
Type 2	120	40.00%
Type 3	85	10.00%
	295
Total Variable Costs	70,707
Total Fixed Costs	34,322	80,000
Total Sales(Revenues)	132,592	100.00%
Variable Costs	70,707	53.33%
Contribution Margin	61,885	46.67%
Fixed Cost	80,000
Profit (Loss)	(18,115)
Break Even Point in $	$171,404
Type 1	$85,702.19	952
Type 2	$68,561.75	571
Type 3	$17,140.44	202
Total Sales Mix (Quantity)	1725

Change one is done to see the impact of increase in fixed we can see the breakeven Quantity increased from 740 to 1725 as more revenues required to cover increased fixed costs.

Change 2

Prices of Services		Sales Mix
Type 1	90	50.00%
Type 2	120	40.00%
Type 3	85	10.00%
	295
Total Variable Costs	70,707
Total Fixed Costs	34,322
Total Sales(Revenues)	132,592	100.00%
Variable Costs	70,707	53.33%
Contribution Margin	61,885	46.67%
Fixed Cost	34,322
Profit (Loss)	27,563
Target Profit	50,000
Break Even Point in $	$180,665
Type 1	$90,332.25	1004
Type 2	$72,265.80	602
Type 3	$18,066.45	213
Total Sales Mix (Quantity)		1818

With Change in target profit your breakeven point in sales and quantity increased as more dollar sales will be required to achieve target profits. Formula for increased target is fixed cost+ target profit/ contribution margin ratio.

Change 3

Prices of Services		Sales Mix
Type 1	90	50.00%
Type 2	120	40.00%
Type 3	85	10.00%
	295
Total Variable Costs	70,707
Total Fixed Costs	34,322
Total Sales(Revenues)	132,592	100.00%
Variable Costs	70,707	53.33%
Contribution Margin	61,885	46.67%
Fixed Cost	34,322
Profit (Loss)	27,563
Target Profit	10,000
Break Even Point in $	$94,962
Type 1	$47,481.16	528
Type 2	$37,984.92	317
Type 3	$9,496.23	112
Total Sales Mix (Quantity)		956

Change three is all about the target profit set up to $10000 so change in quantity.

Change 4 :Change in prices

Prices of Services		Sales Mix
Type 1	150	50.00%
Type 2	170	40.00%
Type 3	95	10.00%
Total Variable Costs	70,707
Total Fixed Costs	34,322
Total Sales(Revenues)	132,592	100.00%
Variable Costs	70,707	53.33%
Contribution Margin	61,885	46.67%
Fixed Cost	34,322
Profit (Loss)	27,563
Break Even Point in $	$73,537
Type 1	$36,768.38	245
Type 2	$29,414.71	173
Type 3	$7,353.68	77
Total Sales Mix (Quantity)		496

With increased price of three types of services quantity required to breakeven reduced to mere 496 in quantity.