Question

Bristol Car Service offers airport service in a mid-size city. Bristol charges $56 per trip to or from the airport. The variable cost for a trip totals $30, for fuel, driver, and so on. The monthly fixed cost for Bristol Rainbow Tours is $7, 280. How many trips must Bristol sell every month to break even? Break-even point trips Bristol's owner believes that 300 trips is a reasonable forecast of the average monthly demand. What is the margin of safety in terms of the number of airport trips? Margin of safety trips

Answer 1

Instructions are listed below.

Step-by-step explanation:

Giving the following information:

Bristol charges $56 per trip

The variable cost= $30

The monthly fixed cost= $7, 280.

To calculate the break-even point we need to use the following formula:

Break-even point= fixed costs/ contribution margin

Break-even point= 7,280 / (56 - 30)= 280 trips

Margin of safety= (current sales level - break-even point)

Margin of safety= 300 - 280= 20 trips