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Question 2(25 marks) ABC Bus Lines runs a series of bus routes. A new...

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Accounting

Question 2(25 marks)
ABC Bus Lines runs a series of bus routes. A new route is being planned for next year.
The Sales Manager says the range of passengers would be:
\table[[20,000,Conservative Estimate],[40,000,Optimistic Estimate],[$26.00,Ticket Price]]
The controller provides the following information:
\table[[$6.00,Fuel],[$6.00,Driver],[$2.00,Selling],[$1.00,Admin],[$15.00,],[$100,000,Facility Overhead (Regardless of Number of Trips)],[$50,000,Selling & Administration (Regardless of Number of Trips)]]Instructions
Assume the first-year results were:
22,450-Passengers
$538,800-Revenue
$123,475-Fuel
$95,415-Driver
$41,500-Selling Variable
$17,250-Administration Variable
$125,000-Facility Costs
$80,000-Selling & Administration
A. Prepare flexible budgets based on 20,000,30,000, and 40,000 passengers.
B. Determine the break-even point for each budget.
C. Prepare a flexible budget report including variances based on the actual results of 22,450 passengers.
D. Discuss the results of the year and decide what action should be taken in the future as a result.
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