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	$8,178
Flight crew salaries	6,264
Airplane depreciation	2,958
Variable cost per passengerbusiness class	55
Variable cost per passengereconomy class	45
Round-trip ticket pricebusiness class	585
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

fill in the blank 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 2 seats
Economy class seats at break-even	fill in the blank 3 seats