Southwest Blue Airways provides air transportation services between Seattle and San Diego. A single Seattle to San Diego round-trip flight has the following operating statistics:
Fuel--7000
flight crew salaries--5400
airplane depreciation--2600
variable cost per passenger, business--50
variable cost per passenger, economy--40
roundtrip ticket price, business--550
roundtrip ticket price, economy--290
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% economy class tickets.
b. How many business class and economy class seats would be sold at the break-even point?