Question

Frightproof Commuter Airlines is considering adding a new flight to its current schedule from Metro to Hicksville. This route has the following prices and costs. Selling price per passenger per flight $ 70 Variable cost per passenger per flight $ 20 Fixed cost per flight $ 4,400 Income tax rate 30 % Required: a. Compute Frightproof's break-even point in number of passengers per flight. b. How many passengers per flight must Frightproof have to earn $1,750 per flight after taxes?

Answer 1

Instructions are listed below

Step-by-step explanation:

Giving the following information:

Selling price per passenger per flight $ 70

Variable cost per passenger per flight $ 20

Fixed cost per flight $ 4,400

Income tax rate of 30 %

1) Break-even point= fixed costs/ controbution margin

Break-even point= 4400/(70-20)= 88 passengers

2) Break-even points= {[Fixed costs + [net profit/(1-t)]}/contribution margin

Break-even points= [4400 + (1750/0.70)]/50= 138 passengers