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25 July, 01:09

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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  1. 25 July, 02:50
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    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.
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