Example 5 Brilliant Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Ontario Air. Brilliant's fixed costs are $36,000 per month. Ontario Air charges passengers $1,300 per round-trip ticket. Required: Under each of the following independent situation. Calculate the number of tickets Brilliant must sell each month to (a) break even and (b) make a target operating income of $12,000 per month 1. Brilliant's variable costs are $34 per ticket. Ontario Air pays Brilliant 10% commission on ticket price. 2.Brilliant's variable costs are $30 per ticket. Ontario Air pays Brilliant 10% commission on ticket price. 3.Brilliant's variable costs are $30 per ticket. Ontario Air pays $46 fixed commission per ticket to Brilliant. Comment on the results. 4.Brilliant's variable costs are $30 per ticket. It receives $46 commission per ticket from Ontario Air. It charges its customers a delivery fee of $8 per ticket. Comment on the results. 3-28 CVP analysis, sensitivity analysis. Roughstyle Shirts Co. sells shirts wholesale to major retailers across Australia. Each shirt has a selling price of $40 with $26 in variable costs of goods sold. The company has fixed manufacturing costs of $1,600,000 and fixed marketing costs of $650,000. Sales commissions are paid to the wholesale sales reps at 10% of revenues. The company has an income tax rate of 30%. Required: 1. How many shirts must Roughstyle sell in order to break even? 2. How many shirts must it sell in order to reach: a. a target operating income of $600,000 ? b. a net income of $600,000 ? 3. How many shirts would Roughstyle have to sell to earn the net income in part 2b if: (Consider each requirement independently.) a. the contribution margin per unit increases by 15%. b. the selling price is increased to $45.00. c. the company outsources manufacturing to an overseas company increasing variable costs per unit by $3.00 and saving 50% of fixed manufacturing costs