Break-Even Sales and Sales Mix for a Service CompanyZero Turbulence Airline provides air transportation servicesbetween Los Angeles, California, and Kona, Hawaii. A singleLos Angeles to Kona round-trip flight has the followingoperating statistics:FuelFlight crew salariesAirplane depreciationVariable cost per passenger-business classVariable cost per passenger-economy classRound-trip ticket price-business classRou rip ticket price-economy classIt is assumed that the fuel, crew salaries, and airplanedepreciation are fixed, regardless of the number of seatssold for the round-trip flight.$14,00610,7285,0664535575275a. Compute the break-even number of seats sold on asingle round-trip flight for the overall enterprise product, E.Assume that the overall product mix is 20% business classand 80% economy class tickets.Total number of seats at break-evenBusiness class seats at break-evenEconomy class seats at break-evenseatsb. How many business class and economy class seatswould be sold at the break-even point?seatsseats

Formula for break-even units in case of sales mix: Total number of units at break-even units=Total…

Answered: Break-Even Sales and Sales Mix for a…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 22E

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Break-even sales and sales mix for a service companyZero Turbulence Airline provides air transportation services betweenLos Angeles, California; and Kona, Hawaii. A single Los Angeles to Konaround-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 arefixed, 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 overallproduct mix is 10% business class and 90% economy class tickets.b. How many business class and economy class seats would besold at the break-even point?
Break-Even Sales and Sales Mix for a Service Company 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 $5,875 Flight crew salaries 4,500 Airplane depreciation 2,125 Variable cost per passenger—business class 70 Variable cost per passenger—economy class 55 Round-trip ticket price—business class 590 Round-trip ticket price—economy class 275 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 enterprise product, E. Assume that the overall product mix is 10% business class and 90% economy class tickets. Total number of seats at break-even seats b. How many business class and economy class seats would be sold at the break-even…
Break-Even Sales and Sales Mix for a Service Company 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 $7,529 Flight crew salaries 5,767 Airplane depreciation 2,724 Variable cost per passenger—business class 60 Variable cost per passenger—economy class 50 Round-trip ticket price—business class 570 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 enterprise product, E. Assume that the overall product mix is 10% business class and 90% economy class tickets. Total number of seats at break-even fill in the blank 1 seats b. How many business class and economy class seats would be sold…
Break-Even Sales and Sales Mix for a Service Company 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 $14,373 Flight crew salaries 11,009 Airplane depreciation 5,198 Variable cost per passenger—business class 70 Variable cost per passenger—economy class 55 Round-trip ticket price—business class 540 Round-trip ticket price—economy class 285 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. If required round the answers to nearest whole number. 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 20% business class and 80% economy class seats. Total number of seats at break-even fill in the blank 1 seats b. How many business…
Break-Even Sales and Sales Mix for a Service Company Yellow Dove Airways provides air transportation services between Portland and Minneapolis. A single Portland to Minneapolis round-trip flight has the following operating statistics: Fuel and landing fees $11,844 Flight crew salaries 9,072 Airplane depreciation 4,284 Variable cost per passenger—business class 45 Variable cost per passenger—economy class 35 Round-trip ticket price—business class 525 Round-trip ticket price—economy class 265 It is assumed that the fuel and landing fees, 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. Round your answer to whole number. Total number of seats at break-even seats b. How many business class and economy class…
Break-Even Sales and Sales Mix for a Service Company Yellow Dove Airways provides air transportation services between Portland and Minneapolis. A single Portland to Minneapolis round-trip flight has the following operating statistics: Fuel and landing fees $7,050 Flight crew salaries 5,400 Airplane depreciation 2,550 Variable cost per passenger—business class 70 Variable cost per passenger—economy class 55 Round-trip ticket price—business class 610 Round-trip ticket price—economy class 295 It is assumed that the fuel and landing fees, 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. Round your answer to whole number. Total number of seats at break-even fill in the blank 1 seats b. How many business class and…
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: Line Item Description Amount Fuel $14,758 Flight crew salaries 11,304 Airplane depreciation 5,338 Variable cost per passenger—business class 50 Variable cost per passenger—economy class 40 Round-trip ticket price—business class 540 Round-trip ticket price—economy class 310 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 company product, M. Assume that the overall product mix is 20% business class and 80% economy class tickets.Total number of seats at break-even fill in the blank 1 of 1 seats b. How many business class and economy class seats would be sold at the break-even…
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 $12,098 Flight crew salaries 9,266 Airplane depreciation 4,376 Variable cost per passenger—business class 45 Variable cost per passenger—economy class 35 Round-trip ticket price—business class 515 Round-trip ticket price—economy class 275 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. If required round the answers to nearest whole number. 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 20% business class and 80% economy class seats. Total number of seats at break-even fill in the blank 1 seats b. How many business class and economy class seats would be sold at the…
Analyze Pacific Airways Pacific Airways provides air travel services between Los Angeles and Seattle. Cost information per flight is as follows: Each flight has a capacity of 150 seats, with an average of 125 seats sold per flight at an average ticket price of 180. Assume Pacific Airways is considering a new service that would provide tickets at half price. Passengers would need to fly standby to receive the discount, but would be provided a flight for a given day of travel. An analysis revealed that an average of 8 existing passengers would use the new discounted tickets for travel. In addition, 15 new passengers would be attracted to the offer. a. Determine the contribution margin per passenger for the full-priced ticket. b. Determine the break-even number of seats sold per flight. c. Determine the contribution margin per passenger for discounted tickets. d. Should Pacific Airways offer the discounted ticket plan? Answer the question by computing the incremental contribution margin per flight for the plan.
Lamont purchased round-trip business-class airfare to Sweden which cost him almost $7,000. He priced the next level of seating and discovered it was only $800. The difference was significant but the reclining seats in business-class made it worth the extra money. What type of pricing is the airline using? A) product-form B) optional product C) captive product D) by-product E) seasonal
Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Bolton Air. Jolly's fixed costs are $25,500 per month. Bolton Air charges passengers $1,300 per round-trip ticket. Read the requirement LOADING... . 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: Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and…
Paty Ltd operating business of shipping it is contemplating two cost structures for its operations. A. The plan has high variable cost pu shipped with lower annual fixed costsB. The plan has lower variable cost with higher fixed cost.Details of Cost:Plan A:Per shipment revenue=100Variable cost per shipment delivered=85Contribution=15Annual fixed cost=1,200,000Plan B:Per shipment revenue=100Variable cost per shipment delivered=60Contribution=40Annual fixed cost=4,500,000Required:1.BEP (In volumes) for both the plans2.Under plan A to produce an operating income of 30,000, how many shipments to be made.3. Shipments to be made under plan A to produce an operating margin which is equal to 9% of sales revenue in total.

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