The Faroe Islands Travel Agency hf. handles sales of Atlantic Airways flights on the route Reykjavk-Vgar. Back-and-forth tickets are sold at 18.000 ISK.

To date, Atlantic Airways has paid Faroe Islands Travel hf. a commission of 10% of the ticket price. The Faroe Islands hf. have no other income. Fixed costs (fixed costs) The Faroe Islands hf. is kr. 280,000 per month (wages, rent etc.) and variable costs is ISK. 400 per ticket sold. Atlantic Airways has now announced a 15% increase in ticket prices starting next month. At the same time, the fee for travel agencies will change. They will then pay kr. 1,500 fixed fee for each ticket sold, regardless of ticket price.

The following are requested:

1. Based on the current arrangement of the commission, what is the need for the Faroe Islands hf. then sell many tickets a month to:

a) reach a break even?

b) have operating income up to 14.000 ISK.

2. What will the answers to a) and b) be based on the new fee structure?