Ask Question
29 June, 14:19

Discount Airlines is preparing a contribution margin report segmented by route. The following information is available: Atlanta / New York Miami/LA New York / Chicago Average ticket price per passenger $900 $1,250 $750 Total passengers served 8,800 7,100 10,200 Total miles flown 121,000 190,000 95,000 The variable costs per unit are as follows: Food/beverage service $7 per passenger Selling $90 per passenger Fuel $15 per mile Wages $20 per mile What is the contribution margin ratio for the Miami/LA route (rounded to one decimal place) ?

+3
Answers (1)
  1. 29 June, 14:44
    0
    17.3%

    Explanation:

    The contribution margin ratio is shown below:

    Contribution margin ratio = Contribution margin : Sales * 100

    where,

    Contribution margin is

    = Sales - variable cost

    Sales arise from passengers ($1,250 * 7,100) $8,875,000

    Less:

    Food ($7 * 7,100) $497,00

    Selling ($90 * 7,100) $639,000

    Fuel ($15 * 190,000) $2,850,000

    Wages ($20 * 190,000) $3,800,000

    Total variable cost ($7,338,700)

    Contribution margin $1,536,300

    So, the contribution margin ratio is

    = $1,536,300 : $8,875,000

    = 17.3%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Discount Airlines is preparing a contribution margin report segmented by route. The following information is available: Atlanta / New York ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers