Costs, scale of production and break-even analysis — practice question

Y2M is a bus operating company in the public sector. A key aim for it is to break even on every bus route. Most of its rivals operate in the private sector. Y2M wants more customers to travel by bus. The Finance Director has been studying the cost figures in Table 1 because Y2M intends to reconsider its pricing methods. She is concerned that other businesses pay workers a higher wage rate and that some of its drivers may leave. She said: ‘Matching that wage rate would raise variable cost to $2.20 per passenger per journey.’