Northern Green Always provides air transportation services between Seattle and S

Question

Northern Green Always provides air transportation services between Seattle and San Diego. A single Seattle to San Diego round-trip flight has the following operating statistics: It is assumed that the fuel. crew salaries, and airplane depreciation are fired. regardless of the number of seats sold for the round trip light. a. Compute the break-even number of seals sold on a single round trip flight for the everall product, E Assume that the overall product is 20% business class and 80% economy class seats. Total numbM of seats at break-even seats How many business class and economy class seats would be sold at the break each paid? Business class seats of break-even seats Economy class seats at break-even seats

Explanation / Answer

Fixed cost = Fuel + Salaries + Depreciation

                  = 15,407 + 11,801 + 5,572

                  = $32,780

Contribution per passenger = Selling price – Variable cost per passenger

                                            = (590 – 60) + (290 – 50)

                                            = 530 + 240

                                            = $770

a.

Total number of seats at break-even = Fixed cost / Contribution per passenger

                                                            = $32,780 / $770

                                                            = 43 seats

b.

Business class seats at break-even = 43 × 20% = 9 seats

Economy class seats at break-even = 43 × 80% = 34 seats

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