Q3. Cost-Volume- Profit & CostBehaviourAnalysis(25 marks)

Sunset Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Hamilton Air. Sunsets fixed costs are $23,500 per month. Hamilton Air charges passengers $1,500 per round-trip ticket.

Calculate the number of tickets Sunset must sell each month to (a) break even and (b) make a target operating income of $10,000 per month in each of the following independent cases.

Required:

1.Sunsets variable costs are $43 per ticket. Hamilton Air pays Sunset 6% commission on ticket price.

2.Sunsets variable costs are $40 per ticket. Hamilton Air pays Sunset 6% commission on ticket price.

3.Sunsets variable costs are $40 per ticket. It receives $60 commission per ticket from Hamilton Air. It charges its customers a delivery fee of $5 per ticket.

4) Comment on the results