Question

Latitude & Attitude Airline provides air transportation services between New York City and George Town, Grand Cayman. A single New York City to George Town, Grand Cay-man round-trip flight has the following operating statistics:
Fuel ..................... $ 10,400
Flight crew salaries ............... 4,300
Airplane depreciation .............. 10,500
Variable cost per passenger—business class ..... 100
Variable cost per passenger—economy class ...... 75
Round- trip ticket price—business class ........ 1,000
Round- trip ticket price—economy class ....... 200
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 product, E. Assume that the overall product mix is 20% business class and 80% economy class tickets.
b. How many business class and economy class seats would be sold at the break- even point?



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  • CreatedJune 27, 2014
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