Reference no: EM132972881

Question - A. Norwalk Express has an opportunity to obtain a new route that would be traveled 15 times per month. The company believes it can sell seats at $180 on the route, but the load factor would be 60 percent. Fixed costs would increase by $250,000 per month for additional crew, additional passenger train cars, maintenance, and so on. Variable cost per passenger would remain at $90.

1. Should the company obtain the route?

2. How many passenger train cars must Norwalk Express operate to earn pre-tax income of $120,000 per month on this route?

3. If the load factor could be increased to 70 percent, 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 Norwalk Express in making its decision about acquiring this route?