LS2645: Paradise Airlines offers customers a vacation plan for Rs 5200. The airline estimates that the fixed costs associated with this plan are Rs.72,00,000 and at a volume of 3,000 passengers Total variable costs would be Rs. 48,00,000 and profits should be Rs. 36,00,000.

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Question: Paradise Airlines offers customers a vacation plan for Rs 5200. The airline estimates that the fixed costs associated with this plan are Rs.72,00,000 and at a volume of 3,000 passengers Total variable costs would be Rs. 48,00,000 and profits should be Rs. 36,00,000.

(i) Find the break-even volume.

(ii) If fixed costs remained constant, how many additional passengers (beyond break-even) would be required to increase profits to Rs. 50,00,000?

 


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