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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 $9,541
Flight crew salaries 7,308
Airplane depreciation 3,451
Variable cost per passengerbusiness class 50
Variable cost per passengereconomy class 40
Round-trip ticket pricebusiness class 540
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 20% business class and 80% 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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