Answer:

Following table lists the cost of flying a charter flight from Baltimore to Las Vegas (and return next day) on a seven year old Boeing 737-8000 with 120 occupied seats.

The break-point occurs when total revenue equals total costs. Break-even unit sales

are calculated as

…… (1)

Where, FC are the fixed cost for the round-trip, P is the price per seat and VC are the variable cost for a round trip.

In case of charter flight, variable cost would vary with the number of occupied seat, that is, food service with seat-by-seat purchase and JIT delivery at each departure.

The number of seats occupied is 120 and the variable cost for 120 passengers is $2,400.

Thus, the variable cost of sending one more person aboard a charter flight is

each way, or $40 for a round-trip.

All the costs except food service are fixed costs. Thus, the fixed cost of a round-trip is

Substitute

,

and

in (1)

Thus, the break-even unit sales are

.

Answer:

The following regression equation is constructed on the basis of the statistical data on 109 selected high schools:

Here,

is the operating expenditure per student,

is the students' average daily attendance,

is the average teacher salary,

is the number of credit units offered,

is the average number of courses taught per teacher,

is the change in enrollment between 1957 and 1960, and

is the percentage of classrooms built after 1950.

An asterisk

over t-values in parenthesis indicates that the result is statistically significant at 0.01 level.

It is evident from the information given that the term is statistically significant at 0.01 level. Thus, a quadratic average cost-output relationship, that is, a cubic total cost-output relationship is suggested by these statistical results.

Answer:

a) Company's breakeven dollar sales volume.

McKee Corporation has annual fixed cost of $12,000,000

The ratio of variable cost is 0.60; hence, the price is $1.

Required amount is

.

b) Sale volume required to earn the target profit of $3 million.

Target volume is

.