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Kare Kars

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Kare Kars provides shuttle service between four hotels near a medical center and
an international airport. Kare Kars uses two 10-passenger vans to offer 12 round trips
per day. A recent month’s activity in the form of a cost-volume-profi t income statement is
shown below.
Fare revenues  (1,440) fares  36,000
Variable costs
 Fuel   5,040
Tolls and parking   3,100
 Maintenance   860  9,000
Contribution margin   27,000
Fixed costs
 Salaries   12,700
 Depreciation   1,300
 Insurance   1,000  15,000
Net income   12,000

(a) Calculate the break-even point in (1) dollars and (2) number of fares.
(b) Without calculations, determine the contribution margin at the break-even point.

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