Spadina Carriage Company offers guided mini-bus tours through downtown Toronto. The tour business is highly regulated by the city. Spadina Carriage Company has the following operating costs during July:

During July (a month during peak season) Spadina Carriage Company had 16,240 passengers. Eighty-five percent of passengers were adults ($30 fare) while 15% were children ($20 fare).
Required:
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 20% in August. 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 July?

Question

Spadina Carriage Company offers guided mini-bus tours through downtown Toronto. The tour business is highly regulated by the city. Spadina Carriage Company has the following operating costs during July:

During July (a month during peak season) Spadina Carriage Company had 16,240 passengers. Eighty-five percent of passengers were adults ($30 fare) while 15% were children ($20 fare).
Required:
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 20% in August. 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 July?

Quizplus · Accepted Answer

The Answer of Spadina Carriage Company offers guided mini-bus tours through downtown Toronto. The tour business is highly regulated by the city. Spadina Carriage Company has the following operating costs during July:

During July (a month during peak season) Spadina Carriage Company had 16,240 passengers. Eighty-five percent of passengers were adults ($30 fare) while 15% were children ($20 fare).
Required:
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 20% in August. 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 July?

Spadina Carriage Company Offers Guided Mini-Bus Tours Through Downtown Toronto