Question

ColtColt Carriage Company offers guided​ horse-drawn carriage rides through historic Camden South Carolina. The carriage business is highly regulated by the city. Carriage Company has the following operating costs during​ April:

During April​ (a month during peak​ season),

ColtColt Carriage Company had 13,100 passengers. 70 percent of passengers were adults

​($25 fare). while 30​% were children ​($17 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 11​% i Data Table 2,300 10% of ticket revenue $0.70/set of postcards $1.70/ticket sold by broker Monthly depreciation expense on carriages and stable Fee paid to the City of Camden Cost of souvenir set of postcards given to each passenger Brokerage fee paid to independent ticket brokers (60% of tickets are issued through these brokers; 40% are sold directly by the Colt Carriage Company) Monthly cost of leasing and boarding the horses.......... ......... Carriage drivers (tour guides) are paid on a per passenger basis..... Monthly payroll costs of non-tour guide employees..... Marketing, website, telephone, and other monthly fixed costs..... 46,000 $3.10 per passenger 7,750 7,000 A Print Print Done Done 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

1	ColtColt Carriage Company
	Contribution Margin Income Statement for month ended April
	Particulars	Amount	Amount	Remarks
	Revenue
	Ticket Revenue		296060	(13100 * 70% * 25) + (13100*30% * 17)
	Less: Variable Cost
	Fees paid to City of Camden	29606		(10% * revenue i.e. 296060)
	Cost of Souvenir post card	9170		($0.70 * 13100 passengers)
	Broker Fees	13362		(13100 * 60% * $1.70)
	Carriage Driver	40610	92748	(13100 * $3.1)
	Contribution Margin		203312	( 296060-92748)
	LESS: Fixed Cost
	Depreciation Expense	2300
	Leasing and Boarding the horses	46000
	Payroll cost of non tour guide	7750
	Marketing and Others	7000	63050
	Net Income		140262	( 203312 - 63050)
2	INCOME STATEMENT IF PASSENGERS VOLUME INCREASED BY 11%
	ColtColt Carriage Company
	Contribution Margin Income Statement for month ended April
	Particulars	Amount	Amount	Remarks
	Revenue
	Ticket Revenue		328626.6	((13100*111%) * 70% * 25) + ((13100*111%)*30% * 17)
	Less: Variable Cost
	Fees paid to City of Camden	32862.66		(10% * revenue i.e. 328626.6)
	Cost of Souvenir post card	10178.7		($0.70 * 14541 passengers)
	Broker Fees	14831.82		(14541 * 60% * $1.70)
	Carriage Driver	45077.1	102950.3	(14541 * $3.1)
	Contribution Margin		225676.3
	LESS: Fixed Cost
	Depreciation Expense	2300
	Leasing and Boarding the horses	46000
	Payroll cost of non tour guide	7750
	Marketing and Others	7000	63050
	Net Income		162626.3
	Income statement woule be changed, contribution margin will increased by the same percentage by which revenue is increased i.e. 11% but net income is increased by more than 11%. Around 15%.
	All fixed expense will remain same as in april because fixed cost remains constant with change of level of activity