Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me with the following: Wembley Travel Agency specialises in flights between Johannesburg and Cape Town. It books passengers on South African Airways at

Please help me with the following: Wembley Travel Agency specialises in flights between Johannesburg and Cape Town. It books passengers on South African Airways at R3000 per round-trip ticket. Until last month, South African Airways paid Wembley a commission of 10% of the ticket price paid by each passenger. This commission was Wembleys only source of revenue. Wembleys fixed costs are R15000 per month (for salaries, rent, etc.), and its variable costs are R100 per ticket purchased for a passenger. This R100 includes a R75 per ticket delivery fee paid to Federal Express. Assume that each round-trip ticket purchased is delivered in a separate package. Thus, the R75 delivery fee applies to each ticket. South African Airways has just announced a revised payment schedule for all travel agents. It will now pay travel agents a 10% commission per ticket up to a maximum of R160. Any ticket costing more than R1600 generates only a R160 commission, regardless of the ticket price. Required: 1. Under the old 10% commission structure, how many round-trip tickets must Wembley sell each month to break even (a), and to earn an operating income of R7500(b)?2.How does South African Airways revised payment schedule affect your answers to (a) and (b) in requirement 1?(Please only assist me for question 2 which asks "How does South African Airway's revised payment schedule affect your answers to (a) and (b) in requirement 1?")

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions