The following are the monthly fixed expenses for Peyton Travel:
Office rent: 	$3,000.00
Depreciation of office furniture	200.00
Utilities	110.00
Telephone	520.00
Reservation Service Fees	380.00
Travel Agent Salaries	1,400.00

Variable expenses include the following:
Travel Agent Commission 	5.0% of sales
Advertising	6.0% of sales
Supplies and Postage	1.0% of sales
Telephone and Reservation Service usage fees	3.0% of sales

a)	Use the contribution margin ratio CVP formula to compute Peyton
Travel?s break-even sales in dollars.  If the average sales price of a
ticket is $660.00; how many tickets must be sold to reach break-even?
b)	Use the income statement equation [revenue - (variable expense +
fixed expense) = operating income] to compute the dollar sales needed
to earn a target monthly operating income of $6,290.00.  How many
tickets is this if the average sales price of a ticket is $660.00?
c)	Assume the average sales price decreases to $440.00 per ticket. 
Use the contribution margin approach to compute Peyton Travel?s new
break-even point in tickets sold.  How does this compare to your
answer in part a) ?

---

Request for Question Clarification by scriptor-ga on 17 Aug 2005 17:30 PDT

May I respectfully suggest that you do your homework assignment
yourself? Google Answers discourages and may remove such questions.

Scriptor

---

Clarification of Question by hacc-ga on 17 Aug 2005 17:57 PDT

Thanks for the concern, but these are practice problems that I am
having trouble with!