Reference no: EM132716520

Problem - 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 $7,000

Flight crew salaries 3,200

Airplane depreciation 3,480

Variable cost per passenger-business class 140

Variable cost per passenger-economy class 120

Round-trip ticket price-business class 800

Round-trip ticket price-economy class 300

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.

Required -

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.

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