Zero Turbulence Airline provides air transportation services between Los Angeles, California, and Kona, Hawaii. A single Los

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Zero Turbulence Airline provides air transportation services between Los Angeles, California, and Kona, Hawaii. A single Los Angeles to Kona round-trip flight has the following operating statistics:

Fuel.....................................................$7,000

Flight crew salaries.................................... 3,200

Airplane depreciation................................. 3,480

Variable cost per passenger-business class....... 140

Variable cost per passenger-economy class....... 120

Round-trip ticket price-business class.............. 800

Round-trip ticket price-economy class............. 300

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 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?

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Related Book For  book-img-for-question

Financial And Managerial Accounting

ISBN: 9781337119207

14th Edition

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

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