Latitude & Attitude Airline provides air transportation services between New York City and George Town, Grand Cayman.

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Latitude & Attitude Airline provides air transportation services between New York City and George Town, Grand Cayman. A single New York City to George Town, Grand Cay-man round-trip flight has the following operating statistics:

Fuel .....................$ 10,400

Flight crew salaries ............... 4,300

Airplane depreciation .............. 10,500

Variable cost per passenger—business class ..... 100

Variable cost per passenger—economy class ...... 75

Round- trip ticket price—business class ........ 1,000

Round- trip ticket price—economy class ....... 200

It is assumed that the fuel, crew salaries, and airplane depreciation are fixed, regardless of the number of seats sold for the round-trip flight.

a. Compute the break-even number of seats sold on a single round-trip flight for the overall product, E. Assume that the overall product mix is 20% business class and 80% economy class tickets.

b. How many business class and economy class seats would be sold at the break- even point?


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Financial and Managerial Accounting

ISBN: 978-1285078571

12th edition

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

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