Sun Airways provides air transportation services between New York and Miami. A single New York to Miami round-trip flight has the following operating statistics:
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,690
Flight crew salaries . . . . . . . . . . . . . . . . . . . . . . . . . 7,510
Airplane depreciation . . . . . . . . . . . . . . . . . . . . . . . 3,200
Variable cost per passenger—business class . . . . . 58
Variable cost per passenger—tourist class . . . . . . . 34
Round-trip ticket price—business class . . . . . . . . . 400
Round-trip ticket price—tourist class . . . . . . . . . . . 240
It is assumed that the fuel, crew salaries, and airplane depreciation are fixed, regardless of the number of seats sold for the round-trip flight.
a. Compute the break-even number of seats sold on a single round-trip flight for the overall product. Assume that the overall product is 25% business class and 75% tourist class tickets.
b. How many business class and tourist class seats would be sold at the break-even point?