Break-Even Sales and Sales Mix for a Service Company 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 $14,941 Flight crew salaries 11,444 Airplane depreciation 5,405 Variable cost per passenger—business class 65 Variable cost per passenger—economy class 50 Round-trip ticket price—business class 525 Round-trip ticket price—economy class 320 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. Total number of seats at break-even fill in the blank 1 seats b.  How many business class and economy class seats would be sold at the break-even point? Business class seats at break-even fill in the blank 2 seats Economy class seats at break-even fill in the blank 3 seats

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Break-Even Sales and Sales Mix for a Service Company

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 $14,941
Flight crew salaries 11,444
Airplane depreciation 5,405
Variable cost per passenger—business class 65
Variable cost per passenger—economy class 50
Round-trip ticket price—business class 525
Round-trip ticket price—economy class 320

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.

Total number of seats at break-even fill in the blank 1 seats

b.  How many business class and economy class seats would be sold at the break-even point?

Business class seats at break-even fill in the blank 2 seats
Economy class seats at break-even fill in the blank 3 seats
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