Reference no: EM131927958

Problem - 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 - $6,392

Flight crew salaries - 4,896

Airplane depreciation - 2,312

Variable cost per passenger-business class - 45

Variable cost per passenger-economy class - 35

Round-trip ticket price-business class - 515

Round-trip ticket price-economy class - 285

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. If required round the answers to nearest whole number.

a. Compute the break-even number of seats sold on a single round-trip flight for the overall product, E. Assume that the overall product is 10% business class and 90% economy class seats.

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