Question

Colt Carriage Company offers guided​ horse-drawn carriage rides through historic Charleston comma South Carolina. The carriage business is highly regulated by the city. Colt Carriage Company has the following operating costs during​ April: LOADING...​(Click the icon to view the​ information.) During April​ (a month during peak​ season), Colt Carriage Company had 13 comma 500 passengers. Sixty percent of passengers were adults ​($23 ​fare) while 40​% were children ​($15 ​fare). Requirements 1. Prepare the​ company's contribution margin income statement for the month of April. Round all figures to the nearest dollar. 2. Assume that passenger volume increases by 10​% in May. Which figures on the income statement would you expect to​ change, and by what percentage would they​ change? Which figures would remain the same as in​ April?

Answer 1

Answer:

1) Colt Carriage Company

Income Statement

For the month ended April 202x

Revenues:

• Adults passengers $186,300
• Children $81,000                      
• Total revenues                                       $267,300

Variable costs:

• City fees $26,730
• Souvenirs $7,425
• Brokerage fees $11,340
• Carriage drivers $52,650
• Total variable costs                                  $98,145

Contribution margin                                        $169,155

Period costs:

• Depreciation $2,900
• Horse leases $48,000
• Marketing expenses $7,350
• Payroll expenses $7,600
• Total period costs                                  $65,850

Operating profit                                             $103,305

2) If the total amount of passengers increase by 10%, then all variable costs will increase by 10% except brokerage fees which would increase only by 6%. Revenues should also increase by 10%. Period costs should not change.

Contribution margin should increase by 10.29% and operating profit would increase by 16.81%.

Explanation:

since the information is not complete, I looked it up:

Revenues

13,500 passengers:

8,100 x $23 = $186,300

5,400 x $15 = $81,000

total $267,300

variable costs:

fees paid to the city 10% of total revenue

souvenirs $0.55 per passenger

brokerage fees 60% of total tickets x $1.40

carriage drivers $3.90 per passenger

fixed costs:

depreciation $2,900

horse leases $48,000

marketing expenses $7,350

payroll expenses $7,600