Break-Even Sales andSales Mixfor 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$12,615Flight crew salaries9,662Airplane depreciation4,563Variable cost per passengerbusiness class70Variable cost per passengereconomy class55Round-trip ticket pricebusiness class530Round-trip ticket priceeconomy class275

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 seats

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

Business class seats at break-even seats

Economy class seats at break-even seats