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Kaiser Air is considering a new flight between Atlanta and Tampa. The average fare per seat...

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.5

b.98

c.427

d.80

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Answer #1

Break even passengers

= Fixed cost / Contribution margin per passenger

= 32,000 / (400-75)

= 32,000/325

= 98

Option B
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