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 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 class seats would be sold at the break-even point?

  • CreatedFebruary 04, 2014
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