Cost behavior and decisions Second City Airlines operates 35 scheduled round-trip flights each week between New York and Chicago. It charges a fixed one-way fare of $200 per passenger. Second City Airlines can carry 150 passengers per one-way flight. Fuel and other flight-related costs are $5,000 per one-way flight. On-flight meal and refreshment costs average $5 per passenger. Flight crew, ground crew, advertising, and other administrative expenditures for the New York–to–Chicago route amount to $400,000 each week.

Required

(a) How many passengers must each of the 70 one-way flights have on average to break even each week?

(b) If the load factor is 60% on all flights (that is, the flights are 60% full), how many flights must Second City Airlines operate on this route to earn a total profit of $500,000 before taxes per week?

(c) Are fuel costs variable or fixed?

(d) What is the variable cost to Second City Airlines for one additional passenger on a flight if the passenger takes a seat that would otherwise go empty?