How many tickets must be sold to reach break-even

Assignment Help Financial Accounting

Reference no: EM1313059

Calculation of break even sales using CVP formula.

The following are the monthly fixed expenses for Peyton Travel:

Office rent:	$3,000.00
Depreciation of office furniture	200
Utilities	110
Telephone	520
Reservation Service Fees	380
Travel Agent Salaries	1,400.00

Variable expenses include the following:

Travel Agent Commission	5.0% of sales
Advertising	6.0% of sales
Supplies and Postage	1.0% of sales
Telephone and Reservation Service usage fees	3.0% of sales

a) Use the contribution margin ratio CVP formula to compute Peyton Travel's break-even sales in dollars. If the average sales price of a ticket is $660.00; how many tickets must be sold to reach break-even?

b) Use the income statement equation [revenue - (variable expense + fixed expense) = operating income] to compute the dollar sales needed to earn a target monthly operating income of $6,290.00. How many tickets is this if the average sales price of a ticket is $660.00?

c) Assume the average sales price decreases to $440.00 per ticket. Use the contribution margin approach to compute Peyton Travel's new break-even point in tickets sold. How does this compare to your answer in part a)?

Reference no: EM1313059

Questions Cloud

Describing the mitochondrial atp synthase : Yeast grows as a haploid cell. In the wild type cells in presence of O2, the pH of mitochondrial matrix is 8, however in cells along with this mutant S gene, the pH is 7. Explain all these results.

Probability of playing card : What is the probability that all three students pick exactly the same card?

Calculating the probability values : What is the probability that all tree students pick a different card?

Determining the genotype of individual : The X gene encodes a transcription factor needed for the activation of C gene. Describe these results and signify the genotypes of all individuals described within this problem.

How many tickets must be sold to reach break-even : Use the contribution margin ratio CVP formula to compute Peyton Travel's break-even sales in dollars. If the average sales price of a ticket is $660.00; how many tickets must be sold to reach break-even

Method of acceptance sampling : Probability that the entire batch will be rejected?

Evaluate peyton travel''s new break-even point : Use the contribution margin approach to evaluate Peyton Travel's new break-even point in tickets sold. How does this compare to your answer in part

Operating margin for the year : Which of the following is a recognized way in which a healthcare organization should define its debt capacity and What effect will the reductions have on operating margin for the year

Explaining specific inheritance pattern : Describe these results by explaining how and why the introns are eliminated and proved the genotypes of Mini, Mickey and Timmy, and their children.

User Account

All Pages