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Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Ottawa Air. Jolly's fixed costs are $28,500 per month. Ottawa Air charges passengers $1,100 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 $36 per ticket. Ottawa 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. Ottawa 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. Ottawa Air pays $47 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 V commission sizably v the breakeven point and the number of tickets required to yield a target operating income of $13,000.

Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Ottawa Air. Jolly's fixed costs are $28,500 per month. Ottawa Air charges passengers $1,100 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 $36 per ticket. Ottawa 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. Ottawa 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. Ottawa Air pays $47 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 V commission sizably v the breakeven point and the number of tickets required to yield a target operating income of $13,000.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....
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Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Ottawa Air. Jolly's fixed costs are $28,500 per month. Ottawa Air charges passengers $1,100 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 $36 per ticket. Ottawa 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. Ottawa 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. Ottawa Air pays $47 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 V commission sizably the breakeven point and the number of tickets required to yield a target operating income of $13,000. Case 4: Jolly's variable costs are $28 per ticket. It receives $47 commission per ticket from Ottawa Air. It charges its customers a delivery fee of $6 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 $6 delivery fee results in a contribution margin which both the breakeven point and the number of tickets sold to attain operating income of $13,000.
Transcribed Image Text:Jolly Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Ottawa Air. Jolly's fixed costs are $28,500 per month. Ottawa Air charges passengers $1,100 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 $36 per ticket. Ottawa 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. Ottawa 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. Ottawa Air pays $47 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 V commission sizably the breakeven point and the number of tickets required to yield a target operating income of $13,000. Case 4: Jolly's variable costs are $28 per ticket. It receives $47 commission per ticket from Ottawa Air. It charges its customers a delivery fee of $6 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 $6 delivery fee results in a contribution margin which both the breakeven point and the number of tickets sold to attain operating income of $13,000.
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