Break-even sales and sales mix for a 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: I Fuel Flight crew salaries Airplane depreciation Variable cost per passenger-business class Variable cost per passenger-economy class Round-trip ticket price-business class Round-trip ticket price-economy class $7,000 3,200 3,480 140 120 800 300 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 enterprise product, E. Assume that the overall product mix is 10% business class and 90% economy class tickets. hHow many business class and economy class seats would be sold at the break-even point?
Break-even sales and sales mix for a 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: I Fuel Flight crew salaries Airplane depreciation Variable cost per passenger-business class Variable cost per passenger-economy class Round-trip ticket price-business class Round-trip ticket price-economy class $7,000 3,200 3,480 140 120 800 300 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 enterprise product, E. Assume that the overall product mix is 10% business class and 90% economy class tickets. hHow many business class and economy class seats would be sold at the break-even point?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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EX 6-22 Break-even sales and sales mix for a service company
Obj. 5
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
Flight crew salaries
Airplane depreciation
Variable cost per passenger-business class
Variable cost per passenger-economy class
Round-trip ticket price-business class
Round-trip ticket price-economy class
$7,000
3,200
3,480
140
120
800
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
enterprise 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?
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