Sparkle Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Milton Air. Sparkle's fixed costs are $$21,000$ per month. Milton Air charges

passengers $$1,200$ per round$-$trip ticket.

Read the requirement.

Case $1$: Sparkle's variable costs are $$36$ per ticket. Milton Air pays Sparkle $8\%$ commission on ticket price.

Sparkle must sell

tickets to break even and

tickets to meet the target operating income.

Case $2$: Sparkle's variable costs are $$26$ per ticket. Milton Air pays Sparkle $8\%$ commission on ticket price.

Sparkle must sell

tickets to break even and

tickets to meet the target operating income.

Case $3$: Sparkle's variable costs are $$26$ per ticket. Milton Air pays $$46$ fixed commission per ticket to Sparkle. Comment on the results.

Sparkle must sell

tickets to break even and

tickets to meet the target operating income.

When comparing Case $3$ to Case $2,$ the

commission sizably

the breakeven point and the number of tickets required to yield a target operating income of

$$11,000.$

Case $4$: Sparkle's variable costs are $$26$ per ticket. It receives $$46$ commission per ticket from Milton Air. It charges its customers a delivery fee of $$4$ per ticket. Comment on the results.

Sparkle must sell

tickets to break even and

tickets to meet the target operating income.

When comparing Case $4$ to Case $3,$ the $$4$ delivery fee results in a

contribution margin which

both the breakeven point and the number of tickets sold to attain

operating income of $$11,000.$