Their financial analyst has estimated that the cost for this route will be as follows: Number...
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Their financial analyst has estimated that the cost for this route will be as follows: Number of seats in each passenger car Average load factor (% of seats filled) Average passenger fare Average variable cost per passenger Fixed operating cost per month. 50 80% $120 $40 $2,400,000 7) Amtrack has an opportunity to obtain a new route that would be traveled 20 times per month with 3 cars. Amtrack believes it can sell seats for $125 on the route, but the load factor would only be 70%. This route would incur fixed costs of $200,000 per month for the additional crew, additional passenger train cars, maintenance and so, on. Variable cost per passenger would remain $40. a. Should Amtrack purchase this route? Why or Why not? b. How many passenger train cars must Amtrack operate to earn pre-tax income of a minimum of $85,000 per month on this route (round to a whole unit). c. If the load factor could be increased to 75%, how many passengers train cars must be operated to earn a pre-tax income of a minimum of $85,000 per month on this route? (round to a whole unit). Their financial analyst has estimated that the cost for this route will be as follows: Number of seats in each passenger car Average load factor (% of seats filled) Average passenger fare Average variable cost per passenger Fixed operating cost per month. 50 80% $120 $40 $2,400,000 7) Amtrack has an opportunity to obtain a new route that would be traveled 20 times per month with 3 cars. Amtrack believes it can sell seats for $125 on the route, but the load factor would only be 70%. This route would incur fixed costs of $200,000 per month for the additional crew, additional passenger train cars, maintenance and so, on. Variable cost per passenger would remain $40. a. Should Amtrack purchase this route? Why or Why not? b. How many passenger train cars must Amtrack operate to earn pre-tax income of a minimum of $85,000 per month on this route (round to a whole unit). c. If the load factor could be increased to 75%, how many passengers train cars must be operated to earn a pre-tax income of a minimum of $85,000 per month on this route? (round to a whole unit).
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Answer rating: 100% (QA)
step 1 We have the following information No of cars 3 Trips per month 20 Selling price 125 No of seats per car 50 Variable Cost 40 Fixed Cost 200000 Load Factor 70 Qa For Amtrack to consider this purc... View the full answer
Related Book For
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn
Posted Date:
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