2. Sunshine airways provides air transportation services between Philadelphia an

Question

2. Sunshine airways provides air transportation services between Philadelphia and Orlando. A single Philadelphia to Orlando round-trip flight has the following operating statistics: Fuel $8,200 Flight Crew Salaries 3,700 Airplane Depreciation3,450 Variable Cost per passenger-business class 100 variable cost per passenger-economy lass 75 Round Trip ticket price-business class600 Round Trip Tickets price-economy class 190 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 roud-trip flight for the overall product. Assume that the overall product is 10% business and 90% economy class tickets. B. How many business class and economy class seats would be sold at the break even point?

Explanation / Answer

let total seats sold be x business class 0.1x economy class 0.9x fixed price = 8200+3700+3450 = 15350 contribution margin = 0.1*(600-100) + 0.9(190-75) = 109.5 x = 15350/109.5 = 140 so business class seats = 14 economy class = 126

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.