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	$17,935
Flight crew salaries	13,738
Airplane depreciation	6,487
Variable cost per passengerbusiness class	65
Variable cost per passengereconomy class	50
Round-trip ticket pricebusiness class	575
Round-trip ticket priceeconomy class	320

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