# Sunset Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on OshawaOshawa Air. SunsetSunset's

## Question:

Sunset Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on OshawaOshawa Air. SunsetSunset's fixed costs are $29,500 per month. OshawaOshawa Air charges passengers $1,600 per round-trip ticket. Read the requiremennt.

Calculate the number of tickets

SunsetSunset must sell each month to (a) break even and(b) make a target operating income of $12,000 per month in each of the following independent cases. (Round up to the nearest whole number. For example, 10.2 should be rounded up to 11.)

| SunsetSunset's variable costs are $42 per ticket.OshawaOshawa Air pays Sunset10% commission on ticket price. |

| SunsetSunset's variable costs are $35per ticket.OshawaOshawa Air pays Sunset10% commission on ticket price. |

| SunsetSunset's variable costs are $35 per ticket. OshawaOshawa Air pays $55 fixed commission per ticket to Sunset.Comment on the results. |

| SunsetSunset's variable costs are $35per ticket. It receives $55 commission per ticket from OshawaOshawa Air. It charges its customers a delivery fee of $5 per ticket. Comment on the results. |

Begin by selecting the formula to calculate the breakeven points. Breakeven number of units = Fixed costs / Contribution margin per unit Next, select the formula to calculate the number of tickets needed to meet the target operating income. Quantity of units required to be sold = ( Fixed costs + Target operating income ) / Contribution margin per unit Now complete the requirement for each of the cases. Begin with case 1. Case 1: SunsetSunset's variable costs are $ 42 per ticket. OshawaOshawa Air pays SunsetSunset 1010% commission on ticket price. Sunset must sell ()tickets to break even and ()tickets to meet the target operating income.

Case 2: SunsetSunset's variable costs are $ 35$35 per ticket. OshawaOshawa Air pays SunsetSunset 1010% commission on ticket price.

Sunset must sell() tickets to break even and() tickets to meet the target operating income.

Case 3: SunsetSunset's variable costs are $ 35$35 per ticket. OshawaOshawa Air pays $ 55$55 fixed commission per ticket to SunsetSunset. Comment on the results.

Sunset must sell ()tickets to break even and *(tickets to meet the target operating income.

When comparing Case 3 to Case 2, the ▼ commission sizably ▼ decreases increases the breakeven point and the number of tickets required to yield a target operating income of $ 12 comma 000$12,000.

Case 4: SunsetSunset's variable costs are $ 35$35 per ticket. It receives $ 55$55 commission per ticket from OshawaOshawa Air. It charges its customers a delivery fee of $ 5$5 per ticket. Comment on the results.

Sunset must sell() tickets to break even and ()tickets to meet the target operating income.

When comparing Case 4 to Case 3, the $ 5$5 delivery fee results in a ▼ higher lower contribution margin which ▼ decreases increases both the breakeven point and the number of tickets sold to attain operating income of $ 12 comma 000$12,000.

**Related Book For**

## Cost management a strategic approach

ISBN: 978-0073526942

5th edition

Authors: Edward J. Blocher, David E. Stout, Gary Cokins