Break-Even Sales and Sales Mix for a Service Company

Northern Green Airways provides air transportation services between Seattle and San Diego. A single Seattle to San Diego round-trip flight has the following operating statistics:

Fuel	$10,152
Flight crew salaries	7,776
Airplane depreciation	3,672
Variable cost per passengerbusiness class	50
Variable cost per passengereconomy class	40
Round-trip ticket pricebusiness class	520
Round-trip ticket priceeconomy class	260

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 is 20% business class and 80% economy class seats.

Total number of seats at break-even

seats

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

Business class seats at break-even	seats
Economy class seats at break-even	seats