If Cape Cod Railway's fixed costs total $70,000 per month, the variable cost per passenger is $20, and tickets sell for $100 , how much revenue must the Railway generate to earn $180,000 in operating income per month?

Question

Jakob Michael

Business

9 December, 11:27

If Cape Cod Railway's fixed costs total $70,000 per month, the variable cost per passenger is $20, and tickets sell for $100 , how much revenue must the Railway generate to earn $180,000 in operating income per month?

+5

Answers (1)

Know the Answer?

Lena Yang · Answer 1

To solve the problem, you have to solve for the total cost by getting the sum of fixed and variable costs:

$70,000 + $2,000 = $72,000 total cost

Then, use the formula of solving for the operating income (Revenue - Total Costs = Operating Income).

The problem is looking for the revenue, here’s how to solve for it:

Let x be the revenue:

X - $72,000 = $180,000

X = $180,000 + $72,000

X = $252,000