Break-Even Sales and Sales Mix for a Service CompanyZero Turbulence Airline provides air transportation services between Los Angeles, California; and Kona, Hawaii. A single Los Angeles to Konaround-trip flight has the following operating statistics:Fuel$8,7986,739Flight crew salariesAirplane depreciation3,183Variable cost per passenger-business class65Variable cost per passenger-economy class50Round-trip ticket price-business class545Round-trip ticket price-economy class320It is assumed that the fuel, crew salaries, and airplane depreciation are fixed, regardless of the number of seats sold for the round-trip flight. Ifrequired 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-evenseatsb. How many business class and economy class seats would be sold at the break-even point?Business class seats at break-evenseatsEconomy class seats at break-evenseats

Break even sales is the dollar amount of revenue at which a business earns a profit of zero i.e. No…

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 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 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 $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 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 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…
CVP analysis, changing revenues and costs.</b> Sunset Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Hamilton Air. Sunset’s fixed costs are $23,500 per month. Hamilton Air charges passengers $1,500 per round-trip ticket. Calculate the number of tickets Sunset must sell each month to (a) break even and (b) make a target operating income of $10,000 per month in each of the following independent cases. Required: Sunset’s variable costs are $43 per ticket. Hamilton Air pays Sunset 6% commission on ticket price. Sunset’s variable costs are $40 per ticket. Hamilton Air pays Sunset 6% commission on ticket price. Sunset’s variable costs are $40 per ticket. Hamilton Air pays $60 fixed commission per ticket to Sunset. Comment on the results. Sunset’s variable costs are $40 per ticket. It receives $60 commission per ticket from Hamilton Air. It charges its customers a delivery fee of $5 per ticket. Comment on the results.
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.
Socrates Air is a low cost airline, primarily operating in Southern and Central Europe. Socrates Income Statement for this year is detailed below: Euro (millions) Sales: 89(Cost of sales*: 45)Gross profit: 44Staffing costs**: 12S,G & A***: 11 *Cost of sales is made up of the 20 million annual cost of leasing aircraft, through a ten year contract with no early exit option and the 25 million cost of aviation fuel, which is purchased on the open market as and when needed** All staff are contractors, employed via “flexible” contracts and are only paid if their services are required by the airline*** S,G & A covers Sales, General and Admin costs, including head office, insurance and IT. Socrates does not vary spending in this area as sales fluctuate, as they believe they have optimised this element of their business model for any economic situation The corporate tax rate is 20% and this is not expected to…
Socrates Air is a low cost airline, primarily operating in Southern and Central Europe. Socrates Income Statement for this year is detailed below:Euro (millions)Sales: 89(Cost of sales*: 45)Gross profit: 44Staffing costs**: 12S,G & A***: 11 Contribution 44 *Cost of sales is made up of the 20 million annual cost of leasing aircraft, through a ten year contract with no early exit option and the 25 million cost of aviation fuel, which is purchased on the open market as and when needed** All staff are contractors, employed via “flexible” contracts and are only paid if their services are required by the airline*** S,G & A covers Sales, General and Admin costs, including head office, insurance and IT. Socrates does not vary spending in this area as sales fluctuate, as they believe they have optimised this element of their business model for any economic situationThe corporate tax rate is 20% and this is not expected to change in the near futureSocrates has total debt of 100 million…

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