Global Freightways is considering the purchase of a new airplane to fly between Tokyo (NRT) and Singapore (SIN), a distance of 2,869 nautical miles. Global Freightways is evaluating two models of aircraft: the Boeing 747-400, which can safely carry 124 tons of freight and the slightly smaller Boeing 777, with an effective capacity of 104 tons. Costs associated with each:

aircraft	monthly fixed debt payment	Other Monthly Fixed Expenses	operating cost per ton/mile
boeing 747-400	$1,367,000	$50,000	$1.45
boeing 777	$1,517,000	$50,000	$1.38

Global Freightways can earn $2 revenue per ton/mile on this route, and expects to fly this plane loaded in both directions between SIN and NRT.

a. What does a break-even analysis indicate about the two choices of aircraft? It is tempting to say the Boeing 777 ‘has a lower break-even point’, but that is a dangerous statement considering that the Boeing 777 is a smaller aircraft.
b. Assuming Global loads each aircraft to its effective capacity, compute the adjusted break-even points to reflect that

* Remember that the 747-400 can safely carry 124 tons of freight and the slightly smaller Boeing 777 has an effective capacity of 104 tons.