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 $12,784

Flight crew salaries 9,792

Airplane depreciation 4,624

Variable cost per passengerbusiness class 70

Variable cost per passengereconomy class 55

Round-trip ticket pricebusiness class 550

Round-trip ticket priceeconomy class 275

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_____ 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