Break-Even Sales and Sales Mix for a Service Company
Northern Green 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 |
$10,002 |
| Flight crew salaries |
7,661 |
| Airplane depreciation |
3,617 |
| Variable cost per passenger-business class |
65 |
| Variable cost per passenger-economy class |
50 |
| Round-trip ticket price-business class |
565 |
| Round-trip ticket price-economy class |
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, E. Assume that the overall product is 10% business class and 90% economy class seats.
| Total number of seats at break-even |
seats |
b. How many business class and economy class seats would be sold at the break-even point?
| Business class seats at break-even |
seats |
| Economy class seats at break-even |
seats
|