Business Finance Homework Help

Fuel per hour:                  $30

Oil per hour:                   $2

Maintenance :  Annual inspection            $1,200

      100 hours of operation periodic inspections:      $800

Tie-down spot:                 $150 per month

Aircraft monthly purchase payments:            $700/mo.

Reserve fund for new engine:              $10/hour

Telephone scheduling & billing services:          $150/mo.

Hull and Liability insurance:              $350/mo.

Miscellaneous:                 $100/mo.

Fixed Costs (FC) were a total of $18,600 for the year (or $1,550 per month).  Variable Costs (VC) were $50 per hour flown 

  Add these to your computations

1.   You will charge dues of $10/month per club member.

2.   Your goal is to add 5 new members per month, but your starting out with no members.

3.   Your instructors will charge $35/hour, of which you will retain $10/hour as the owner.

4.   50% of all of the flight hours on the plane will be with flight instructors on board giving instruction.

5.   Non-members are charged $110/hour for the airplane, members are charged $100/hour.

6.   You conclude that in the first year, 50% of all of the flight hours will be flown by non-members.  50% of those hours will be with an Instructor.

QUESTIONS: (a)     At what point in time during the year will you Break-Even ?

                      (b)   How many  Flight Hours will it take to do so, and 

      (c)    How long will that take if your aircraft flies the following # hours per month. (see below)

      (d)    Prepare a new computer generated color B-E graph for this last problem (c).

  This a team/group assignment.  Turn in only one paper per group to be submitted by your designated team representative.

MONTH   HRS 

January   10 

Feb      30   

March    40   

April      60   

May      80   

June      100 

July      120 

August    110 

Sept        90   

October    80   

Nov        60   

Dec      40     

__________

Year      820

Each group member had $1,500 to buy the plane. Together that added up to $13,500.

Our plane cost $27,900.

$27,900-$13,500= $14,400

We pull a loa out for $14,400 for a bank with a 12% interest, to be payed in 3 years

Overall we will owe $14,400×1.12=$16,128 over the next 3 year.

$16,128 over the next 3 years will be $5,376 per year.

$5,376 per year / 12 months = $448 per month.

This will make our VC (448+1,550)=$1998 per month.