Question

Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfi’s base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent month’s activity in the form of a cost-volume-profit income statement. Fare revenues (400 passenger flights) $48,000 Variable costs Fuel $18,080 Snacks and drinks 720 Landing fees 1,800 Supplies and forms 1,000 21,600 Contribution margin 26,400 Fixed costs Depreciation 3,050 Salaries 13,200 Advertising 300 Airport hanger fees 1,600 18,150 Net income $8,250 Calculate the break-even point in dollars.

Answer 1

Answer:

Break Even Points = $33,000

Explanation:

Provided Net Revenue = $48,000

Variable Cost = $21,600

Contribution = $26,400

Fixed Cost = $18,150

Break even point in dollars = Fixed Cost/ Contribution margin

Contribution margin = $26,400/$48,000 $\times$ 100 = 55%

Break Even Points = $18,150/55% = $33,000.00

When we calculate break even point in dollars we use contribution margin, therefore this is computed by percentage of contribution.

Final Answer

Break Even Points = $33,000.00