Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

13-34 Airline pricing, considerations other than cost in pricing. Costal Airways is about to introduce a daily round-trip flight from New York to Los Angeles

image text in transcribed
13-34 Airline pricing, considerations other than cost in pricing. Costal Airways is about to introduce a daily round-trip flight from New York to Los Angeles and is determining how to price its round-trip tickets The market research group at Costal Airways segments the market into business and pleasure travelers. It provides the following information on the effects of two different prices on the number of seats expected to be sold and the variable cost per ticket, including the commission paid to travel agents: Number of Seats Expected to Be Sold Variable Cost per Ticket $65 150 Business 225 215 Pleasure 110 25 Price Charged $600 ,350 Pleasure travelers start their travel during one week, spend at least one weekend at their destination, and return the following week or thereafter. Business travelers usually start and complete their travel within the same work week. They do not stay over weekends. Assume that round-trip fuel costs are fixed costs of $18,500 and that fixed costs allocated to the round-trip flight for airplane- lease costs, ground services, and flight-crew salaries total $150,000. 1. If you could charge different prices to business travelers and pleasure travelers, would you? Show your computations. Required

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Measurement And Internal Audit Operations

Authors: Andrew Fight

1st Edition

184112401X, 978-1841124018

More Books

Students also viewed these Accounting questions