ACC 210-Break-Even Sales and Sales Mix for a Service Company

Subject: Business    / Accounting

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