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:
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 |
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