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 tickets to meet the target operating income. Case 2: Jolly's variable costs are $28 per ticket. Bolton Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and tickets to meet the target operating income. Case 3: Jolly's variable costs are $28 per ticket. Bolton Air pays $48 fixed commission per ticket to Jolly. Comment on the results. Jolly must sell tickets to break even and tickets to meet the target operating income. When comparing Case 3 to Case 2, the ▼ decreased increased commission sizably ▼ decreases increases the breakeven point and the number of tickets required to yield a target operating income of $14,000. Case 4: Jolly's variable costs are $28 per ticket. It receives $48 commission per ticket from Bolton Air. It charges its customers a delivery fee of $10 per ticket. Comment on the results. Jolly must sell tickets to break even and tickets to meet the target operating income. When comparing Case 4 to Case 3, the $10 delivery fee results in a ▼ higher lower contribution margin which ▼ decreases increases both the breakeven point and the number of tickets sold to attain operating income of $14,000. Calculate the number of tickets Jolly must sell each month to (a) break even and (b) make a target operating income of $14,000 per month in each of the following independent cases. (Round up to the nearest whole number. For example, 10.2 should be rounded up to 11.) 1. Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price. 2. Jolly's variable costs are $28 per ticket. Bolton Air pays Jolly 6% commission on ticket price. 3. Jolly's variable costs are $28 per ticket. Bolton Air pays $48 fixed commission per ticket to Jolly. Comment on the results. 4. Jolly's variable costs are $28 per ticket. It receives $48 commission per ticket from Bolton Air. It charges its customers a delivery fee of $10 per ticket. Comment on the results.

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 tickets to meet the target operating income. Case 2: Jolly's variable costs are $28 per ticket. Bolton Air pays Jolly 6% commission on ticket price. Jolly must sell tickets to break even and tickets to meet the target operating income. Case 3: Jolly's variable costs are $28 per ticket. Bolton Air pays $48 fixed commission per ticket to Jolly. Comment on the results. Jolly must sell tickets to break even and tickets to meet the target operating income. When comparing Case 3 to Case 2, the ▼ decreased increased commission sizably ▼ decreases increases the breakeven point and the number of tickets required to yield a target operating income of $14,000. Case 4: Jolly's variable costs are $28 per ticket. It receives $48 commission per ticket from Bolton Air. It charges its customers a delivery fee of $10 per ticket. Comment on the results. Jolly must sell tickets to break even and tickets to meet the target operating income. When comparing Case 4 to Case 3, the $10 delivery fee results in a ▼ higher lower contribution margin which ▼ decreases increases both the breakeven point and the number of tickets sold to attain operating income of $14,000. Calculate the number of tickets Jolly must sell each month to (a) break even and (b) make a target operating income of $14,000 per month in each of the following independent cases. (Round up to the nearest whole number. For example, 10.2 should be rounded up to 11.) 1. Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price. 2. Jolly's variable costs are $28 per ticket. Bolton Air pays Jolly 6% commission on ticket price. 3. Jolly's variable costs are $28 per ticket. Bolton Air pays $48 fixed commission per ticket to Jolly. Comment on the results. 4. Jolly's variable costs are $28 per ticket. It receives $48 commission per ticket from Bolton Air. It charges its customers a delivery fee of $10 per ticket. Comment on the results.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 62P

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Question

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

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

commission on ticket price.

Jolly must sell

tickets to break even and

tickets to meet the target operating income.

Case 2:

Jolly's

variable costs are

$28

per ticket.

Bolton

Air pays

Jolly

commission on ticket price.

Jolly must sell

tickets to break even and

tickets to meet the target operating income.

Case 3:

Jolly's

variable costs are

$28

per ticket.

Bolton

Air pays

$48

fixed commission per ticket to

Jolly.

Comment on the results.

Jolly must sell

tickets to break even and

tickets to meet the target operating income.

When comparing Case 3 to Case 2, the

▼

decreased

increased

commission sizably

▼

decreases

increases

the breakeven point and the number of tickets required to yield a target operating income of

$14,000.

Case 4:

Jolly's

variable costs are

$28

per ticket. It receives

$48

commission per ticket from

Bolton

Air. It charges its customers a delivery fee of

$10

per ticket. Comment on the results.

Jolly must sell

tickets to break even and

tickets to meet the target operating income.

When comparing Case 4 to Case 3, the

$10

delivery fee results in a

▼

higher

lower

contribution margin which

▼

decreases

increases

both the breakeven point and the number of tickets sold to attain operating income of

$14,000.

Calculate the number of tickets

Jolly

must sell each month to (a) break even and (b) make a target operating income of

$14,000

per month in each of the following independent cases. (Round up to the nearest whole number. For example, 10.2 should be rounded up to 11.)

1.	Jolly's variable costs are $44 per ticket. Bolton Air pays Jolly 6% commission on ticket price.
2.	Jolly's variable costs are $28 per ticket. Bolton Air pays Jolly 6% commission on ticket price.
3.	Jolly's variable costs are $28 per ticket. Bolton Air pays $48 fixed commission per ticket to Jolly. Comment on the results.
4.	Jolly's variable costs are $28 per ticket. It receives $48 commission per ticket from Bolton Air. It charges its customers a delivery fee of $10 per ticket. Comment on the results.

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