Break-Even Analysis: Airport Shuttle
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Airport Connection provides shuttle service between four hotels near a medical center and an international airport. Airport Connection uses two 10 passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume-profit income statement is shown below.
Fare revenues (1,440 fares) $36,000
Variable costs
Fuel $5,040
Tolls and Parking 3,100
Maintenance 500
Total 8,640
Fixed costs
Salaries 13,000
Depreciation 1,300
Insurance 1,128
Total 15,428
Net income $11,932
Find the break-even point in dollars and in fares.
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Solution Summary
This solution shows how to calculate an airport shuttle service's break-even point in terms of dollars and in number of fares.
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The break-even point is the minimum level of income that covers all costs.
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