Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Hamilton Air. Sunset$\text{'}$s fixed costs are $ $23$ comma $500$ per month. Hamilton Air charges passengers $ $1$ comma $500$ per$$ round$-$trip ticket.

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Part $1$

Begin by selecting the formula to calculate the breakeven points.

Breakeven

number of units

$=$

Fixed costs

$-$:

Contribution margin per unit

Part $2$

$$Next$,$ select the formula to calculate the number of tickets needed to meet the target operating income.

Quantity of units

required to be sold

$=($

Fixed costs

$+$

Target operating income

$)-$:

Contribution margin per unit

Part $3$

Now complete the requirement for each of the cases. Begin with case $1.$

Case$1$: Sunset$\text{'}$s variable costs are $ $43$ per ticket. Hamilton Air pays Sunset $6\%$ commission on ticket price.

Sunset must sell

$500$

tickets to break even and

$713$

tickets to meet the target operating income.

Part $4$

Case$2$: Sunset$\text{'}$s variable costs are $ $40$ per ticket. Hamilton Air pays Sunset $6\%$ commission on ticket price.

Sunset must sell

$470$

tickets to break even and

$670$

tickets to meet the target operating income.

Part $5$

Case$3$: Sunset$\text{'}$s variable costs are $ $40$ per ticket. Hamilton Air pays $ $60$ fixed commission per ticket to Sunset. Comment on the results.

Sunset must sell

$1,175$

tickets to break even and

$1,675$

tickets to meet the target operating income.

Part $6$

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

decreased

commission sizably

increases

the breakeven point and the number of tickets required to yield a target operating income of $ $10$ comma $000.$

Part $7$

Case$4$: Sunset$\text{'}$s 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. Comment on the results.

Sunset must sell

tickets to break even and

tickets to meet the target operating income.