Reference no: EM132500863

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$12,615

Flight crew salaries9,662

Airplane depreciation4,563

Variable cost per passenger-business class70

Variable cost per passenger-economy class55

Round-trip ticket price-business class530

Round-trip ticket price-economy class275

• 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.

Question 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.

Total number of seats at break-even seats

Question 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