Question
Ideal Airways is a small local carrier that flies among the northeast states. The company provides only one class of seats: coach. The following data
Ideal Airways is a small local carrier that flies among the northeast states. The company provides only one class of seats: coach. The following data are available:
Average full passenger fare $150
Number of seats per plane 120
Average load factor (seats occupied) 70%
Average variable cost per passenger $ 40
Fixed operating costs per month $1,800,000
You are a financial consultant hired by Ideal Airways and are asked to conduct the following analyses for the company. Please write up your analysis report.Your report should be type-written, clear and well organized.
- Ideal has experienced an increase in variable cost per passenger to $50 and an increase in total fixed operating costs to $2,000,000.The company has decided to raise the average fare to $180.What number of passengers is needed to generate a pre-tax income of $1,000,000?
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