Answer:
a. Contribution margin per passenger = $40
b. Contribution margin ratio = 50%
c. Operating Income = $160,000
d. Operating Income = $27,500
Explanation:
a. Contribution margin per passenger = Ticket price per passenger - Variable cost per passenger
Contribution margin per passenger = $80 - $40
Contribution margin per passenger = $40
b. Contribution margin ratio = Contribution margin per passenger / Ticket price per passenger
Contribution margin ratio = $40 / $80
Contribution margin ratio = 0.5
Contribution margin ratio = 50%
c. Contribution margin per passenger = $40
Sales (in units) = 13,000 Passengers
Total Contribution = $520,000
Fixed Costs = $360,000
Operating Income = $160,000
d. Sales revenue = $775,000
Contribution margin ratio = 50%
Total Contribution =$387,500 ($775,000 * 50%)
Fixed Costs = $360,000
Operating Income = $27,500
