Fly-by-Night Airways provides air transportation services between New York and Miami. A single New York to Miami
Question:
Fly-by-Night Airways provides air transportation services between New York and Miami. A single New York to Miami round-trip flight has the following operating statistics:
Fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,540
Flight crew salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,310
Airplane depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,995
Variable cost per passenger—business class . . . . . . . . . . . . . . 45
Variable cost per passenger—tourist class . . . . . . . . . . . . . . . 35
Round-trip ticket price—business class . . . . . . . . . . . . . . . . 350
Round-trip ticket price—tourist class . . . . . . . . . . . . . . . . . . 225
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. Assume that the overall product is 20% business class and 80% tourist class tickets.
b. How many business class and tourist class seats would be sold at the break-even point?
Step by Step Answer:
Accounting
ISBN: 978-0324401844
22nd Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac