(Solved): GH Bus Service Ltd runs rapid Luxurious Bus transport system from Accra to Tamale in Ghana. The fai ...

GH Bus Service Ltd runs rapid Luxurious Bus transport system from Accra to Tamale in Ghana. The faire for a round-trip is GHS 1.500 and variable expense is GHS 1,000 per passenger. The company's hires the bus for a monthly fixed charge of GHS 100,000. Actual average monthly passengers are 500. Required: (a) Estimate the contribution margin and variable cost ratios [4 marks] [5 marks] (b) Compute the company's degree of operating leverage. (c) Using the degree of operating leverage you computed, determine the percentage operating income when average monthly passengers increases to 600. change in net [2 marks] (d) Estimate the company's break-even point in passenger units and in Cedi value. [4 marks] (e) If the company wishes to earn GHS 150,000 in net operating income during the coming month, how many passengers should the company obtain? [2 marks] (f) Compute the margin of safety in units and in percentages. What does the values you obtained [4 marks] mean? (g) Suppose several new entrants are offering rapid bus services at Axim price, and GH Bus Services Ltd plans to reduce its faire by GHS 300 to compete effectively. Also, the company plans to run radio and TV adverts that would cost GHS 20,000. The combined effect will be increase in average monthly passengers to 650. Do you think this is a good plan? (Suppose your [6 marks] answer with relevant computations) 2