Breakeven analysis and capacity planning exercises

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Reference no: EM132226448

(Before solving this question refer to Example 2 in the Breakeven Analysis and Capacity Planning Exercises Handout. A video solution is under Module 2 at Course Documents on BB.) You finished your school and only in 10 years became a very successful CEO of your own company. You are almost printing money now! As you fly to many different places, you do not want to waste your time in the airports. You would like to satisfy your flying needs by AUJets’ fractional aircraft ownership program. You can pick from three different plans. Unlimited Plan costs $7,000,000 flat fee per year and gives you unlimited flight time. If you choose Plan-A, you pay $2,000,000 per year and get a total of 60 hours of flight time for free. Any flight time above 60 hours is charged $15,000 per hour. If you choose Plan-B, you pay $3,000,000 per year, and get 110 hours of flight time. Any flight time above 110 hours is charged $12,000 per hour. Note that buying a plan means that you buy “capacity for your flight service”.

NOTE: SHOW ALL YOUR WORK. USE 4 DECIMAL PLACES IN YOUR CALCULATIONS.

If you need to fly for 400 hours per year. Which plan should you choose to minimize the cost of AUJet’s fractional ownership service?

What is the maximum amount of service required (in flight hours) for you to choose Plan A?

What is the minimum amount of service required (in flight hours) for you to choose the Unlimited Plan?

What is the range of the amount of service required (in flight hours) for you to choose plan B?

Reference no: EM132226448

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