Solution-How much pre-tax income would the discounted fare

How much pre-tax income would the discounted fare provide

Reference no: EM132634540

Norwalk Express is a luxury passenger carrier in Connecticut. All seats are located in first class, and the following data are available:

Number of seats per passenger train car 70

Average load factor (percentage of seats filled) 80%

Average full passenger fee $ 170

Average variable cost per passenger $ 90

Fixed operating cost per month $ 2,700,000

Norwalk Express is considering offering a discounted fare of $130, which the company believes would increase the load factor to 90 percent. Only the additional seats would be sold at the discounted fare. Additional monthly advertising cost would be $ 170,000.

Question 1: How much pre-tax income would the discounted fare provide Norwalk Express if the company has 40 passenger train cars per day, 30 days per month?

Reference no: EM132634540

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How much pre-tax income would the discounted fare provide

Reference no: EM132634540

Reference no: EM132634540

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