Question

Counton Carriage Company offers guided​ horse-drawn carriage rides through historic Anderson comma South Carolina. The carriage business is highly regulated by the city. Counton Carriage Company has the following operating costs during​ April: LOADING...​(Click the icon to view the​ information.) During April​ (a month during peak​ season), Counton Carriage Company had 12 comma 800 passengers. Sixty percent of passengers were adults ​($26 ​fare) while 40​% were children ​($18 ​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 10​% 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

Answer: please refer to the explanation section

Step-by-step explanation:

The question is incomplete the Variable costs were not given in the question. contribution margin income statement requires variable costs to be subtracted from sales to arrive at a contribution margin. We will assume variable costs per unit were $ 10 for each horse drawn carriage rides in order to be able to prepare a contribution Margin income statement properly.

1. Contribution Margin Income Statement

*Sales 291840

**variable costs - 128000

contribution margin 163840

* sales from adults = (12800 x 60%) x $26 = 7680 x 26 = 199680

sales from childrens = (12800 x 40%) x $18 = 92160

total revenue = 199680 + 921840 = $ 291840

* Variable costs = 12800 x $10 = $128000

2. Effects of a 10 rise in volume (number of passengers)

when the number of passengers rise by 10%, Sales, Variable costs and contribution margin will be affected. Contribution margin will be affected because a change in sales or variable costs directly causes a change in the contribution margin.

Sales will increase by 10%

variable costs will increase by 10%

contribution margin will increase by 10%.

Figures that would remain the same in April

Fixed costs will remain the same regardless of the number of passengers in a month