Question

Sunset Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Edmonton Air. Sunset's foxed costs are $25,500 per month. Edmonton Air charges a Read the requirement go $1,300 per round-trip tiket Begin by selecting the formula to calculate the breakeven points Breakeven Requirement 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: Sunset's variable costs are 544 per ticket. Edmonton Air pays Sunset 6% commission on ticket price Sunset must sell tickets to break even and tickets to meet the target operating income Calculate the number of tickets Sunset must sell each month to (a) brook even and b) make a target operating income of $11.000 per month in each of the following independent cases (Round up to the nearest whole number. For example 102 should be rounded up to 11.) 1. Sunset's variable costs are $44 per ticket. Edmonton Air pays Sunset 6% commission on ticket price 2. Sunset's variable costs are $28 par ticket. Edmonton Air pays Sunset 6% commission on ticket price. 3. Sunset's variable cents are $28 per ticket Edmonton Air pays $48 fixed commission per Ecket to Sunset Comment on the results 4. Sunsel's variable costs are $28 per ticket. It receives 548 commission per ticket from Edmonton Air.it charges its customers a delivery fee of $10 per ticket. Comment on the results Print Done

Answer 1

Case 1
	Sales Price per ticket	$                              1,300
	Less:Variable cost per ticket	$                                   44
	Less:Commission per ticket($1300*6%)	$                                   78
	Contribution margin per ticket	$                              1,178
	Fixed Costs	$                            25,500
	Breakeven point($25,500/$1,178)	22 tickets
	Target Operating Income	$                            11,000
	Add:Fixed Costs	$                            25,500
	Target Contribution margin	$                            36,500
	Contribution margin per ticket	$                              1,178
	Quantity of units required to be sold($36,500/$78)	31 tickets
Case 2
	Sales Price per ticket	$                              1,300
	Less:Variable cost per ticket	$                                   28
	Less:Commission per ticket($1300*6%)	$                                   78
	Contribution margin per ticket	$                              1,194
	Fixed Costs	$                            25,500
	Breakeven point($25,500/$1,194)	21 tickets
	Target Operating Income	$                            11,000
	Add:Fixed Costs	$                            25,500
	Target Contribution margin	$                            36,500
	Contribution margin per ticket	$                              1,194
	Quantity of units required to be sold($36,500/$1194)	31 tickets
Case 3
	Sales Price per ticket	$                              1,300
	Less:Variable cost per ticket	$                                   28
	Less:Commission per ticket	$                                   48
	Contribution margin per ticket	$                              1,224
	Fixed Costs	$                            25,500
	Breakeven point($25,500/$1224)	21 tcikets
	Target Operating Income	$                            11,000
	Add:Fixed Costs	$                            25,500
	Target Contribution margin	$                            36,500
	Contribution margin per ticket	$                              1,224
	Quantity of units required to be sold($36,500/$78)	30 tickets
	Note:The fixed commission of $48 per ticket is a variable cost and not a fixed one.
Case 4
	Sales Price per ticket	$                              1,300
	Less:Variable cost per ticket	$                                   28
	Less:Commission per ticket	$                                   48
	Less:Delivery Fees	$                                   10
	Contribution margin per ticket	$                              1,214
	Fixed Costs	$                            25,500
	Breakeven point($25,500/$1224)	21 tickets
	Target Operating Income	$                            11,000
	Add:Fixed Costs	$                            25,500
	Target Contribution margin	$                            36,500
	Contribution margin per ticket	$                              1,214
	Quantity of units required to be sold($36,500/$78)	30 ticktes