Price

5000

variable cost
contribution

2000
3000

fixed cost
profit

2000
1000

fixed cost
passengers
fc per passenger
price
nos of tickets sold
revenue
variable cost
contribution
fixed costs
profit

price
nos of tickets sold
revenue
variable cost
contribution
fixed costs
profit
price
nos of tickets sold
revenue
variable cost
contribution
fixed costs
profit

price
nos of tickets sold
revenue
variable cost
contribution
fixed costs

600000
300
2000
6000

2000
2000
600000

0
0
0
0
600000
(600000)
(6.00)

50
300000
100000
200000
600000
(400000)
(4.00)

100
600000
200000
400000
600000
(200000)
(2.00)

0
0
0
0
600000
(600000)
(6.00)

50
250000
100000
150000
600000
(450000)
(4.50)

100
500000
200000
300000
600000
(300000)
(3.00)

0
0
0
0
600000
(600000)
(6.00)

50
200000
100000
100000
600000
(500000)
(5.00)

100
400000
200000
200000
600000
(400000)
(4.00)

0
0
0
0
600000

50
200000
150000
50000
600000

100
400000
300000
100000
600000

5000

2000
3000
600000

4000

2000
2000
600000

3000

2000
1000
600000

profit

price
nos of tickets sold
revenue
variable cost
contribution
fixed costs
profit

price
nos of tickets sold
revenue
variable cost
contribution
fixed costs
profit

price
nos of tickets sold
revenue
variable cost
contribution
fixed costs
profit

(600000)
(6.00)

(550000)
(5.50)

(500000)
(5.00)

0
0
0
0
600000
(600000)
(6.00)

50
100000
100000
0
600000
(600000)
(6.00)

100
200000
200000
0
600000
(600000)
(6.00)

0
0
0
0
600000
(600000)
(6.00)

50
75000
100000
-25000
600000
(625000)
(6.25)

100
150000
200000
-50000
600000
(650000)
(6.50)

0
0
0
0
600000
(600000)
(6.00)

50
50000
100000
-50000
600000
(650000)
(6.50)

100
100000
200000
-100000
600000
(700000)
(7.00)

2000

2000
0
600000

1500

2000
-500
600000

1000

2000
-1000
3000

significance of marginal contribution

Unit variable cost of a ticket is Rs. 2000. Fixed cost is Rs. 6 lacs. Unit selling price so far was
Rs. 6000. Tickets are now not getting sold.
Ticketing person would like to know upto what limit or level that the price can be
brought down, so that the ticket should not be sold below that price.

sold tickets
price
revenue
unit variable cost
variable cost
contribution
fixed cost
profit
profit (Rs lacs)

current status
200
6000

one additional ticket being sold at different prices

1
1
1
5000
4000
3000

1200000

1205000

1204000

1203000

400000
800000
600000
200000
2.00

402000
803000
600000
203000
2.03

402000
802000
600000
202000
2.02

402000
801000
600000
201000
2.01

2000

concept of marginal cost (equal to the variable cost)

150
900000
300000
600000
600000
0
0.00

200
1200000
400000
800000
600000
200000
2.00

250
1500000
500000
1000000
600000
400000
4.00

300
1800000
600000
1200000
600000
600000
6.00

150
750000
300000
450000
600000
(150000)
(1.50)

200
1000000
400000
600000
600000
0
0.00

250
1250000
500000
750000
600000
150000
1.50

300
1500000
600000
900000
600000
300000
3.00

150
600000
300000
300000
600000
(300000)
(3.00)

200
800000
400000
400000
600000
(200000)
(2.00)

250
1000000
500000
500000
600000
(100000)
(1.00)

300
1200000
600000
600000
600000
0
0.00

150
600000
450000
150000
600000

200
800000
600000
200000
600000

250
1000000
750000
250000
600000

300
1200000
900000
300000
600000

(450000)
(4.50)

(400000)
(4.00)

(350000)
(3.50)

(300000)
(3.00)

150
300000
300000
0
600000
(600000)
(6.00)

200
400000
400000
0
600000
(600000)
(6.00)

250
500000
500000
0
600000
(600000)
(6.00)

300
600000
600000
0
600000
(600000)
(6.00)

150
225000
300000
-75000
600000
(675000)
(6.75)

200
300000
400000
-100000
600000
(700000)
(7.00)

250
375000
500000
-125000
600000
(725000)
(7.25)

300
450000
600000
-150000
600000
(750000)
(7.50)

150
150000
300000
-150000
600000
(750000)
(7.50)

200
200000
400000
-200000
600000
(800000)
(8.00)

250
250000
500000
-250000
600000
(850000)
(8.50)

300
300000
600000
-300000
600000
(900000)
(9.00)

cs. Unit selling price so far was

that the price can be

onal ticket being sold at different prices

1
1
2000
1000
1202000

1201000

402000
800000
600000
200000
2.00

402000
799000
600000
199000
1.99