Break-Even Sales and Sales Mix for a Service Company

Zero Turbulence Airline provides air transportation services between Los Angeles, California, and Kona, Hawaii. A single Los Angeles to Kona round-trip flight has the following operating statistics:

Fuel	$7,144
Flight crew salaries	5,472
Airplane depreciation	2,584
Variable cost per passengerbusiness class	70
Variable cost per passengereconomy class	55
Round-trip ticket pricebusiness class	550
Round-trip ticket priceeconomy class	315

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 enterprise product, E. Assume that the overall product mix is 20% business class and 80% economy class tickets.

Total number of seats at break-even

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

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