8.9

Breakeven sales and sales mio for a service comp-ony Zero Turbulence Airline grovides air transportotion seevices between Los Angeles, Calfornis, and Mona, Hoteaii. A single Los Angeles to Nona round-uip fight has the foliowing operating statistics: It is assumed that the fuel, crew salaries, and airplane depreoistion are fixed, regardless of the number of seats sald for the round-trip filght. a. Compute the break-even number of seats sold on a single round-trip fight for the overall company product, M. kssume that the overan product mix is tow busitess class and 99% ecanomy cinss tichets. Total number of seats at bresk-even seats b. How mony business ciass and economy class seats would be sold at the break-even peinct? Business class seats at break-even seats Econermy class seats at break-even seats Break-even swes under presemt and proposed conditions The divison of costs betincen variable and fined is an followi 1. Determine the tptal fixed costs and the tocal quriasle costs for the cuirent year Tequired: Total yarabie costs Total fixed costs 1 Unit veriabin cist 1 Total fixed cowts ? 2. beterimine {a} the unit warlathe cost and (B) the unik conbibutice margin for the carment wear. Unit variatik cost 1 Linit contribution maxgin 1 3. Combute the bresk-tren sales (units) for the current yeat. units 4. Comsute the breakeven sakes (urits) under the bropoted pregram for the folmwing reot. units current year. unte 6. Determine the Imaximum operating income posuble with the expacded piant 7. If the procosal is accested and sales remain at the curent wevel, what wial the operativg inceme or aess be for the following rese? B. Based on the data piven, apuld you recommend accepeng the proposait a. In favor at the proposil because of the ropuctions in break-even point. b. In toror of the pruposal because of the pestbith of increasiry operating inceme- Chobse the covrect antwer