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Wembley Travel Agency specializes in ights between Los Angeles and London. Enter question

It books passengers on United Airlines at $900 per round-trip ticket.

Until last month, United paid Wembley a commission of 10% of the ticket price paid by each passenger. Continue to post
The commission was Wembley's only source of revenues. 20 questions remaining

Wembley's xed costs are $14,000 per month (for salaries, rent and so on) and its variable costs, such as commissions and bonu

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United Airlines has just announced a revised payment schedule for all travel agents.
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It will now pay travel agents a 10% commission per ticket up to a maximum of $50.

Any ticket costing more than $500 generates only a $50 commission, regardless of the ticket price. 888-888-8888 Text
Wembley's managers are concerned about how United's new payment schedule will affect its break-even point and pro tability By providing your phone number, you agree to receiv
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Requirement 1: Under the old 10% commission structure, how many round-trip tickets must Wembley sell each month a) to bre

Requirement 2: How does United's revised payment schedule affect your answer to a) and b) in requirement 1? My Textbook Solutions

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Selling Price (900*10%) $        90

Variable Cost $        20

Contribution $        70

Fixed Cost $ 14,000

1.a Breakeven number of tickets (14000/70) 200 Tickets

1.b Quantity of ticket to be sold for Target pro t ((14000+7000)/70) 300 Tickets

Selling Price $        50

Variable Cost $        20

Contribution $        30

Fixed Cost $ 14,000

2.a Breakeven number of tickets (14000/30) 467 Tickets

2.b Quantity of ticket to be sold for Target pro t ((14000+7000)/30) 700 Tickets

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