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

Y2M is a bus company operating in the public sector. One of its aims is to break even on every bus route. Most of its rivals operate in the private sector. Y2M wants to raise the number of customers who travel by its buses. The Finance Director has been examining some cost data in Table 1. This is because Y2M plans to review how it prices its services. He is concerned that other businesses pay workers a higher wage rate and that some of its drivers might leave. She stated: ‘If the same wage rate were paid, variable cost would rise to $2.20 per passenger per journey.’