Reference no: EM131876056

Exercise - Break-even sales and sales mix for a service company

Yellow Dove Airways provides air transportation services between Portland and Minneapolis. A single Portland to Minneapolis round-trip flight has the following operating statistics:

Fuel and landing fees $19,400

Flight crew salaries 3,760

Airplane depreciation 2,600

Variable cost per passenger- business class 50

Variable cost per pasenger- per passenger- economy class 20

Round-trip ticket price- business class 750

Round-trip ticket price- economy class 300

It is assumed that the fuel and landing fees, 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 product. Assume that the overall product is 10% business class and 90% economy class tickets.

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