8/10/2019 submit it

1/2

8/10/2019 submit it

2/2

g. Springfield Express has an opportunity to obtain a new route that would be traveled 2# ti!es per !onth.The co!pany believes it can sell seats at ( 1& on the route, but the load factor would be only )# percent.*ixed cost would increase by ( 2#,### per !onth for additional personnel, additional passenger train cars,!aintenance, and so on. -ariable cost per passenger would re!ain at ( .

1. o they should not obtain the additional route

2. ?ow !any passenger train cars !ust Springfield Express operate to earn pre0tax inco!e of ( 12#,###per !onth on this route@

+. f the load factor could be increased to & percent, how !any passenger train cars !ust be operated toearn pre0tax inco!e of ( 12#,### per !onth on this route@AcBuiring this route@

ew load factor/)#' of "#/8rofit/c! ratio=sales0fixed expenses

ew fixed costs/+,1#,###;2#,###/+,8##,###C5/1&0/1#C5 ratio/#.)12#,### / #.)=sales0+,8##,###

Sales/,9)),))&1&/++,281 car /8 passengers++,28 will fill up ++,288/)21 cars

ew load/&' of "# /)9 passengers

*or 12#,### you need ++,28 passengersith )9 passengers you need/++,28)9/8"+ car

8. Springfield should consider such things as $Thin4 of Bualitative factors that are i!portant. n other words, notthe nu!bers but other things that have to be considered, e.g., ris4s%

1. hat if the passengers do not purchase the tic4ets@2. The cost of having !ore trains will increase overhead cost+. 5ore trains and passengers will need additional e!ployees that will also increase the overhead. n addition thefeelings of the e!ployees with !ore shifts that !ay be added if !ore e!ployees are not hired8. Effect on custo!ers present and future with growth of the co!pany