Zero Turbulence Airline provides air transportation services between Los Angeles, California, and Kona, Hawaii. A single Los
Question:
Zero Turbulence Airline provides air transportation services between Los Angeles, California, and Kona, Hawaii. A single Los Angeles to Kona round-trip flight has the following operating statistics:
Fuel.....................................................$7,000
Flight crew salaries.................................... 3,200
Airplane depreciation................................. 3,480
Variable cost per passenger-business class....... 140
Variable cost per passenger-economy class....... 120
Round-trip ticket price-business class.............. 800
Round-trip ticket price-economy class............. 300
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, E. Assume that the overall product mix is 10% business class and 90% economy class tickets.
b. How many business class and economy class seats would be sold at the break-even point?
Step by Step Answer:
Financial And Managerial Accounting
ISBN: 9781337119207
14th Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac