CVP Analysis with Subsidies Suburban Bus Lines operates as a not-for-profi t organization providing local transit service.

3-39. CVP Analysis with Subsidies 

 Suburban Bus Lines operates as a not-for-profi t organization providing local transit service. As a 

not-for-profi t, it refers to an excess of revenues over costs as a "surplus" and an excess of costs over 

revenues as a "defi cit." Suburban charges $1.00 per ride. The variable costs of a ride are $1.50. The 

fi xed costs of Suburban are $200,000 annually. The county government provides Suburban with a 

fl at subsidy of $250,000 annually. 

 Required 

a. What is the break-even point for Suburban? 

b. Suburban expects 75,000 riders this year. Will it operate at a surplus or defi cit?