Chapter 12 mework Problems Profits have been thinking about dropping several tig

Question

Chapter 12 mework Problems Profits have been thinking about dropping several tights thet appear to be unprofitable. decreasing for several years at Pegasus Artines, In an effort to improve the company's performance, the company is A typical Income statement for one round-trip of one such flight (Might 482) s as folows: revenae (195 seats 230 ticket price) variable expecaas ($19.00 per person) $17,940 100.0. ContrLatlon sargin 1,90 rl Light promot ion epreelat 90 on et sireratt 1 for airorntt huence 1,300 1,830 aggage Loading and t Net operaning less The following addtional information is availilable about tight 482 a Members of the fight crew are paid fixed annual salaries, whereas the fight assistants are paid based on the number of round trips b. One-third of the Sability insurance is a special charge assessed against flight 482 because in the opinion of the insurance company c The beggage loading and fight preparation expense is an allocation of ground crews' salaries and depreciation of ground hry complete. the destinstion of the fight is in a high-eisk area. The remaining two-irds would be unattected by a decision to drop fight 482. eamet Droccing fight 482 wold have no eflect on the company's total baggage looding and tight preparation expenses d. " fight 482 s dropped, Pegasus Annes has n° 1horization at present to replace it with another flight Depreciation due to wear and tear is negligble tDropping tight 42 would not ellow Pegsus Alrines to reduce the number of aircraft in its fleet or the number of fight crew on its payroi 1. What is the financial advantage sdvantege) of discontinuing flight 4827

Explanation / Answer

Solution:

Statement showing impact of dropping flight 482 on Airline Profit - Pegasus Airline Particulars Amount Loss of contribution -$16,458.00 Saving of Flight attendant salaries $1,300.00 Saving in liability insurance cost ($4,800*1/3) $1,600.00 Saving in flight promotion cost $790.00 Saving in fuel cost $5,300.00 Saving in overnight costs for flight crew and attendants at destination $700.00 Financial advantage (disadvantage) of dropping Flight 482 -$6,768.00

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.