Lofty Airlines has a flight for which the regular ticket price is $200 and the variable costs per passenger are $50. Fixed costs assigned to each flight are $12,000. Each flight has a capacity of 125 seats, with an average of 95 seats sold at the regular price. To attract customers to the last 30 unsold seats, Lofty discounts the tickets by 50% for standby passengers. The break-even number of regular-priced seats per flight is a. 120 b. 80 c. 95 d. 50

Lofty Airlines has a flight for which the regular ticket price is $200 and the variable costs per passenger are $50. Fixed costs assigned to each flight are $12,000. Each flight has a capacity of 125 seats, with an average of 95 seats sold at the regular price. To attract customers to the last 30 unsold seats, Lofty discounts the tickets by 50% for standby passengers. The break-even number of regular-priced seats per flight is a. 120 b. 80 c. 95 d. 50

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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Midwest Airlines flies a short nonstop with 148-passenger planes. Considering all the costs of owning each plane plus the salaries for their crews and the fuel costs and landing fees, the fixed cost for a single flight is $16,500. If the costs associated with each passenger (reservations cost, check-in cost, baggage handling cost, snack cost, etc.) total $75 per passenger and the average ticket price is $214 (before the various taxes are added), what percentage of seats must be filled for the flight to break even?
Analyze Pacific Airways Pacific Airways provides air travel services between Los Angeles and Seattle. Cost information per flight is as follows: Each flight has a capacity of 150 seats, with an average of 125 seats sold per flight at an average ticket price of 180. Assume Pacific Airways is considering a new service that would provide tickets at half price. Passengers would need to fly standby to receive the discount, but would be provided a flight for a given day of travel. An analysis revealed that an average of 8 existing passengers would use the new discounted tickets for travel. In addition, 15 new passengers would be attracted to the offer. a. Determine the contribution margin per passenger for the full-priced ticket. b. Determine the break-even number of seats sold per flight. c. Determine the contribution margin per passenger for discounted tickets. d. Should Pacific Airways offer the discounted ticket plan? Answer the question by computing the incremental contribution margin per flight for the plan.
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. Q1. Sunset’s variable costs are $43 per ticket. Hamilton Air pays Sunset 6% commission on ticket price. Q2. Sunset’s variable costs are $40 per ticket. Hamilton Air pays Sunset 6% commission on ticket price. Q3. Sunset’s variable costs are $40 per ticket. Hamilton Air pays $60 fixed commission per ticket to Sunset. Comment on the results. Q4. 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.
Rocky Mountain Waterpark sells half of its tickets for the regular price of $75. The other half goes to senior citizens and children for the discounted price of $35. Variable cost per guest is $15 for both groups, and fixed costs total $60,000 per month. What is Rocky Mountain’s breakeven point in total guests? Regular guests? Discount guests? 2,000; 1,000; 1,000 800; 400; 400 750; 375; 375 1,500; 750; 750
Rocky Mountain Waterpark sells half of its tickets for the regular price of $75. The other half go to senior citizens and children for the discounted price of $35. Variable cost per guest is $15 for both groups, and fixed costs total $60,000 per month. What is Rocky Mountain’s breakeven point in total guests? Regular guests? Discount guests? a. 2,000; 1,000; 1,000 b. 800; 400; 400 c. 750; 375; 375 d. 1,500; 750; 750
How do I compute the breakeven point in tickets and in sale dollars? Thrills sells tickets at $50 per person as a one day entrance fee. Variable costs are $28 per person, and fixed costs are $166,500 per month
amounts with a $0 balance, make sure to enter " 0 " in the appropriate input field.) Now compute the breakeven point in sales dollars. Enter the formula, then compute the breakeven sales. (Enter the contribution margin ratio as a whole percent. For amounts with a $0 balance, make sure to enter " 0 " in the appropriate input field.)
A corporate executive jet with a seating capacity of 20 has the following cost factors: The company flies three round trips from Boston to London and back perweek. a distance of 3.280 miles one way. How many passengers must be carried on an average round trip in order to justify the use of the jet if the alternative commercial airline first-class round-trip fare is $3,400 per passenger? The firm's MARR is 15%. ( Ignore income-tax consequences.)
Travel Agency specializes in flights between Toronto and Peru. It books passengers on Toronto Air. North’s fixed costs are $35,000 per month. Toronto Air charges passengers $1,700 per round-trip ticket.Calculate the number of tickets North Travel must sell each month to (a) break even and (b) make a target operating income of $17,000 per month in each of the following independent cases.Required:1. North’s variable costs are $33 per ticket. Toronto Air pays Sunset 5% commission on ticket price.2. North’s variable costs are $37 per ticket. Toronto Air pays Sunset 7% commission on ticket price.3. North’s variable costs are $53 per ticket. Toronto Air pays $68 fixed commission per ticket to North. Comment on the results.4. North’s variable costs are $40 per ticket. It receives $60 commission per ticket from Toronto Air. It charges its customers a delivery fee of $5 per ticket. Comment on the results.
Travel Agency specializes in flights between Toronto and Peru. It books passengers on Toronto Air. North’s fixed costs are $35,000 per month. Toronto Air charges passengers $1,700 per round-trip ticket.Calculate the number of tickets North Travel must sell each month to (a) break even and (b) make a target operating income of $17,000 per month in each of the following independent cases.Required:1. North’s variable costs are $33 per ticket. Toronto Air pays Sunset 5% commission on ticket price.2. North’s variable costs are $37 per ticket. Toronto Air pays Sunset 7% commission on ticket price.3. North’s variable costs are $53 per ticket. Toronto Air pays $68 fixed commission per ticket to North. Comment on the results.4. North’s variable costs are $40 per ticket. It receives $60 commission per ticket from Toronto Air. It charges its customers a delivery fee of $5 per ticket. Comment on the results. (please give the solution of part 4 and part 5 of this question as the previous are…
The Marla and Kerry Theatre Group operates five discount movie theatres in the Chicago area. All tickets are priced at P1.75. Variable costs are P1.10 per patron, and the fixed costs per year total P900,000. The fixed costs include concessions, but the variable costs do not. The concessions earn an average contribution margin of P.60 per patron. a. How many patrons are required to break even? b. If 800,000 patrons are expected for the year, what ticket price would be necessary to earn a profit of P150,000? Determine the number of units to be sold of each of the products to breakeven.
Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $13.00 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the commission paid to the airport operator, and so on, is $11.40. The annual fixed cost for GGN is $15,120. Required: How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. The owner of GGN believes that the company can sell 12,600 chains a year. What is the margin of safety in terms of the number of chains?