Question
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
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:
Line Item Description | Amount |
---|---|
Fuel | $14,269 |
Flight crew salaries | 10,930 |
Airplane depreciation | 5,161 |
Variable cost per passengerbusiness class | 40 |
Variable cost per passengereconomy class | 30 |
Round-trip ticket pricebusiness class | 550 |
Round-trip ticket priceeconomy class | 280 |
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 company product, M. Assume that the overall product mix is 10% business class and 90% economy class tickets. Total number of seats at break-even fill in the blank 1 of 1 seats
b. How many business class and economy class seats would be sold at the break-even point? Business class seats at break-even fill in the blank 1 of 2 seats Economy class seats at break-even fill in the blank 2 of 2 seats
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