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 $8,258

Flight crew salaries 6,325

Airplane depreciation 2,987

Variable cost per passengerbusiness class 40

Variable cost per passengereconomy class 30

Round-trip ticket pricebusiness class 570

Round-trip ticket priceeconomy class 250

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 10% business class and 90% economy class seats. Total number of seats at break-even?

b. How many business class and economy class seats would be sold at the break-even point?

Business class seats at break-even?

Economy class seats at break-even?