Rusty Co. sells two products: X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows:
-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)80
C)98
D)427

Question

Rusty Co. sells two products: X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows:  ​
-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)80 
C)98 
D)427

Quizplus · Accepted Answer

To find the break-even number of passengers, use the formula: Break-even point (in units) = Fixed Costs / (Price per unit - Variable cost per unit). Here, it is $32,000 / ($400 - $75) = 98 passengers.

Rusty Co Sells Two Products: X and Y