Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Bolton Air. Jolly's fixed costs are $25,500 per month. Bolton Air charges passengers $1,300 per round-trip ticket. Read the requirement LOADING... . Begin by selecting the formula to calculate the breakeven points. Breakeven number of units = Fixed costs ÷ Contribution margin per unit Next, select the formula to calculate the number of tickets needed to meet the target operating income. Quantity of units required to be sold = ( Fixed costs + Target operating income ) ÷ Contribution margin per unit Now complete the requirement for each of the cases. Begin with case 1. Case 1: Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and tickets to meet the target operating income. Case 2: Jolly's variable costs are $28 per ticket. Bolton Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and tickets to meet the target operating income. Case 3: Jolly's variable costs are $28 per ticket. Bolton Air pays $48 fixed commission per ticket to Jolly. Comment on the results. Jolly must sell tickets to break even and tickets to meet the target operating income. When comparing Case 3 to Case 2, the ▼ decreased increased commission sizably ▼ decreases increases the breakeven point and the number of tickets required to yield a target operating income of $14,000. Case 4: Jolly's variable costs are $28 per ticket. It receives $48 commission per ticket from Bolton Air. It charges its customers a delivery fee of $10 per ticket. Comment on the results. Jolly must sell tickets to break even and tickets to meet the target operating income. When comparing Case 4 to Case 3, the $10 delivery fee results in a ▼ higher lower contribution margin which ▼ decreases increases both the breakeven point and the number of tickets sold to attain operating income of $14,000. Calculate the number of tickets Jolly must sell each month to (a) break even and (b) make a target operating income of $14,000 per month in each of the following independent cases. (Round up to the nearest whole number. For example, 10.2 should be rounded up to 11.) 1. Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price. 2. Jolly's variable costs are $28 per ticket. Bolton Air pays Jolly 6% commission on ticket price. 3. Jolly's variable costs are $28 per ticket. Bolton Air pays $48 fixed commission per ticket to Jolly. Comment on the results. 4. Jolly's variable costs are $28 per ticket. It receives $48 commission per ticket from Bolton Air. It charges its customers a delivery fee of $10 per ticket. Comment on the results.
Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Bolton Air. Jolly's fixed costs are $25,500 per month. Bolton Air charges passengers $1,300 per round-trip ticket. Read the requirement LOADING... . Begin by selecting the formula to calculate the breakeven points. Breakeven number of units = Fixed costs ÷ Contribution margin per unit Next, select the formula to calculate the number of tickets needed to meet the target operating income. Quantity of units required to be sold = ( Fixed costs + Target operating income ) ÷ Contribution margin per unit Now complete the requirement for each of the cases. Begin with case 1. Case 1: Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and tickets to meet the target operating income. Case 2: Jolly's variable costs are $28 per ticket. Bolton Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and tickets to meet the target operating income. Case 3: Jolly's variable costs are $28 per ticket. Bolton Air pays $48 fixed commission per ticket to Jolly. Comment on the results. Jolly must sell tickets to break even and tickets to meet the target operating income. When comparing Case 3 to Case 2, the ▼ decreased increased commission sizably ▼ decreases increases the breakeven point and the number of tickets required to yield a target operating income of $14,000. Case 4: Jolly's variable costs are $28 per ticket. It receives $48 commission per ticket from Bolton Air. It charges its customers a delivery fee of $10 per ticket. Comment on the results. Jolly must sell tickets to break even and tickets to meet the target operating income. When comparing Case 4 to Case 3, the $10 delivery fee results in a ▼ higher lower contribution margin which ▼ decreases increases both the breakeven point and the number of tickets sold to attain operating income of $14,000. Calculate the number of tickets Jolly must sell each month to (a) break even and (b) make a target operating income of $14,000 per month in each of the following independent cases. (Round up to the nearest whole number. For example, 10.2 should be rounded up to 11.) 1. Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price. 2. Jolly's variable costs are $28 per ticket. Bolton Air pays Jolly 6% commission on ticket price. 3. Jolly's variable costs are $28 per ticket. Bolton Air pays $48 fixed commission per ticket to Jolly. Comment on the results. 4. Jolly's variable costs are $28 per ticket. It receives $48 commission per ticket from Bolton Air. It charges its customers a delivery fee of $10 per ticket. Comment on the results.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 1MAD: Analyze Pacific Airways Pacific Airways provides air travel services between Los Angeles and...
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Question
Jolly
Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on
Bolton
Air.
Jolly's
fixed costs are
$25,500
per month.
Bolton
Air charges passengers
$1,300
per round-trip ticket.Read the
requirement
LOADING...
.Begin by selecting the formula to calculate the breakeven points.
|
Breakeven
|
|
|
|
|
|
||
|
number of units
|
=
|
Fixed costs
|
÷
|
|
|
Next, select the formula to calculate the number of tickets needed to meet the target operating income.
Quantity of units
|
|
|
|
|
|
|
||
required to be sold
|
= (
|
Fixed costs
|
+
|
Target operating income
|
) ÷
|
|
Now complete the requirement for each of the cases. Begin with case 1.
Case 1:
Jolly's
variable costs are
$44
per ticket.
Bolton
Air pays
Jolly
6%
commission on ticket price.
Jolly must sell
|
|
tickets to break even and
|
|
tickets to meet the target operating income.
|
Case 2:
Jolly's
variable costs are
$28
per ticket.
Bolton
Air pays
Jolly
6%
commission on ticket price.
Jolly must sell
|
|
tickets to break even and
|
|
tickets to meet the target operating income.
|
Case 3:
Jolly's
variable costs are
$28
per ticket.
Bolton
Air pays
$48
fixed commission per ticket to
Jolly.
Comment on the results.
Jolly must sell
|
|
tickets to break even and
|
|
tickets to meet the target operating income.
|
When comparing Case 3 to Case 2, the
commission sizably
the breakeven point and the number of tickets required to yield a target operating income of
▼
decreased
increased
▼
decreases
increases
$14,000.
Case 4:
Jolly's
variable costs are
$28
per ticket. It receives
$48
commission per ticket from
Bolton
Air. It charges its customers a delivery fee of
$10
per ticket. Comment on the results.
Jolly must sell
|
|
tickets to break even and
|
|
tickets to meet the target operating income.
|
When comparing Case 4 to Case 3, the
contribution margin which
both the breakeven point and the number of tickets sold to attain operating income of
$10
delivery fee results in a
▼
higher
lower
▼
decreases
increases
$14,000.
Calculate the number of tickets
Jolly
must sell each month to (a) break even and (b) make a target operating income of
$14,000
per month in each of the following independent cases. (Round up to the nearest whole number. For example, 10.2 should be rounded up to 11.)
1.
|
Jolly's
variable costs are
$44
per ticket.
Bolton
Air pays
Jolly
6%
commission on ticket price. |
2.
|
Jolly's
variable costs are
$28
per ticket.
Bolton
Air pays
Jolly
6%
commission on ticket price. |
3.
|
Jolly's
variable costs are
$28
per ticket.
Bolton
Air pays
$48
fixed commission per ticket to
Jolly.
Comment on the results. |
4.
|
Jolly's
variable costs are
$28
per ticket. It receives
$48
commission per ticket from
Bolton
Air. It charges its customers a delivery fee of
$10
per ticket. Comment on the results. |
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