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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

  1. 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 $11,054
    Flight crew salaries 8,467
    Airplane depreciation 3,999
    Variable cost per passengerbusiness class 70
    Variable cost per passengereconomy class 55
    Round-trip ticket pricebusiness class 540
    Round-trip ticket priceeconomy class 305

    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. If required round the answers to nearest whole number.

    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

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