Kare Kars provides shuttle service between four hotels near a medical center and an international airport. Kare Kars uses two 10-passenger vans to offer 12 round trips per day. A recent month Solution (a) Calculate the break-even point in (1) dollars and (2) number of fares. (1) Break-even point in dollar= Fixed Cost/ contribution margin ratio Fixed Cost = 13090 contribution margin ratio = contribution margin/Fare revenues Contribution margin ratio = 21560/30800 Contribution margin ratio = 0.70 Break-even point in dollar = 13090/0.7 Break-even point in dollar= $ 18700 (2) Break-even point in units = Break-even point in dollar / Fare Price Fare Price = 30800/1400 = 22 Break-even point in units = 18700/22 Break-even point in units = 850 fares (b) Without calculations, determine the contribution margin at the break-even point. Contribution margin at the break-even point = $ 13090 Note: Contribution margin at the break-even point is always equal to Fixed Cost .