Kaiser Air is considering a new flight between Atlanta and Tampa. The average fare per seat is $400. The fixed costs for the flight, which include crew salaries, operating costs, and aircraft depreciation, total $32,000. Variable costs per passenger total $75. The break-even number of passengers per flight is a. 427 b. 80 c. 98 d. 5

Question

Barnes

Business

31 August, 05:30

Kaiser Air is considering a new flight between Atlanta and Tampa. The average fare per seat is $400. The fixed costs for the flight, which include crew salaries, operating costs, and aircraft depreciation, total $32,000. Variable costs per passenger total $75. The break-even number of passengers per flight is a. 427 b. 80 c. 98 d. 5

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Tommy Nolan · Answer 1

The break-even number of passengers per flight is c. 98

Explanation:

Given:

Average fare per seat = $400

Fixed costs for the flight = $32,000

Variable costs per passenger = $75

Break-even number of passengers per flight = Fixed cost / Contribution margin per passenger

Contribution margin per passenger = 400-75

So, break-even number of passenger per flight = 32,000 / (400-75)

= 32,000/325

= 98

The break-even number of passengers per flight is c. 98

The correct option is C.