CVP analysis, changing revenues and costs. Sunset Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Hamilton Air. Sunset’s fixed costs are $23,500 per month. Hamilton Air charges passengers $1,500 per round-trip ticket. Calculate the number of tickets Sunset must sell each month to (a) break even and (b) make a target operating income of $10,000 per month in each of the following independent cases. 1. Sunset’s variable costs are $43 per ticket. Hamilton Air pays Sunset 6% commission on ticket price. 2. Sunset’s variable costs are $40 per ticket. Hamilton Air pays Sunset 6% commission on ticket price. 3. Sunset’s variable costs are $40 per ticket. Hamilton Air pays $60 fixed commission per ticket to Sunset. Comment on the results. 4. Sunset’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.
CVP analysis, changing revenues and costs. Sunset Travel Agency specializes in flights between
Toronto and Jamaica. It books passengers on Hamilton Air. Sunset’s fixed costs are $23,500 per month.
Hamilton Air charges passengers $1,500 per round-trip ticket.
Calculate the number of tickets Sunset must sell each month to (a) break even and (b) make a target operating
income of $10,000 per month in each of the following independent cases.
1. Sunset’s variable costs are $43 per ticket. Hamilton Air pays Sunset 6% commission on ticket price.
2. Sunset’s variable costs are $40 per ticket. Hamilton Air pays Sunset 6% commission on ticket price.
3. Sunset’s variable costs are $40 per ticket. Hamilton Air pays $60 fixed commission per ticket to Sunset.
Comment on the results.
4. Sunset’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.
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