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 $5,875 Flight crew salaries 4,500 Airplane depreciation 2,125 Variable cost per passenger—business class 70 Variable cost per passenger—economy class 55 Round-trip ticket price—business class 590 Round-trip ticket price—economy class 275 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 seats b.  How many business class and economy class seats would be sold at the break-even point? Business class seats at break-even seats Economy class seats at break-even seats

FINANCIAL ACCOUNTING
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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 $5,875
Flight crew salaries 4,500
Airplane depreciation 2,125
Variable cost per passenger—business class 70
Variable cost per passenger—economy class 55
Round-trip ticket price—business class 590
Round-trip ticket price—economy class 275

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 seats

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

Business class seats at break-even seats
Economy class seats at break-even seats
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