BREAK-EVEN ANALYSIS

You will be submitting your Case Study 1 (Links to an external site.) this week.

Norwalk Express is a luxury passenger carrier in Connecticut. All seats are located in first class, and the following data are available.

Number of Seats per Passenger Train Car	70
Average Load Factor (percentage of seats filled)	80%
Average Full Passenger Fee	$170
Average Variable Cost per Passenger	$90
Fixed Operating Cost per Month	$2,700,000

1. What is the break-even point in passengers and revenues per month? (Round Contribution Margin percentage to the nearest tenth of a percent and the break-even point to the nearest dollar).
2. If Norwalk Express raises its average passenger fare to $200, it is estimated that the load factor will decrease to 70%. What will be the monthly break-even point in number of passenger cars?
3. (Refer to the original data.) If fuel costs increase by 18 per barrel, it is now estimated that the variable cost per passenger will rise to $110. What would be the new break-even point in passengers and in the number of passenger train cars? (Round to the nearest whole number.)
4. Norwalk Express has experienced an increase in variable cost to $100 and an increase in total fixed cost to $3,200,000. The company has decided to raise the average fare to $180. If the tax rate is 20%, how many passengers per month are needed to generate an after-tax profit of $700,000? (Round to the nearest whole dollar and unit.)
5. Norwalk Express is considering offering a discounted fare of $130, which the company believes would increase the load factor to 90%. Only the additional seats would be sold at the discounted fare. Additional monthly advertising cost would be $170,000. How much pre-tax income would the discounted fare provide Norwalk Express if the company has 40 passenger train cars per day, 30 days per month?

Please be sure to answer all of the questions and show your work