Springfield Express is a

Springfield Express is a

Springfield Express is a luxury passenger carrier in Texas. All seats are first class, and the following data are available:Number of seats per passenger train car 90Average load factor (percentage of seats filled) 70%Average full passenger fare $160 Average variable cost per passenger $ 70Fixed operating cost per month $3,150,000g. Springfield Express has an opportunity to obtain a new route that would be traveled 20 times per month. The company believes it can sell seats at $175 on the route, but the load factor would be only 60%. Fixed cost would increase by $250,000 per month for additional personnel, additional passenger train cars, maintenance, and so on. Variable cost per passenger would remain at $70. 1. Should the company obtain the route? 2. How many passenger train cars must Springfield Express operate to earn pre-tax income of $120.000 per month on this route? 3. If the load factor could be increased to 75%, how many passenger train cars must be operated to earn pre-tax income of $120,000 per month on this route? 4. What qualitative factors should be considered by Springfield Express in making it’s decision about acquiring this route?

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