Question

Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfi's base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent month's activity in the form of a cost-volume-profit income statement. $40,000 y Study $13,460 1,900 1,200 17,280 30,720 Fare revenues (400 passenger flights) Variable costs Fuel Snacks and drinks Landing fees Supplies and forms Contribution margin Fixed costs Depreciation Salaries Advertising Airport hanger fees Net Income 2,950 18,090 1,700 23,040 $7,680 Calculate the break-even point in dollars. Break-even points Calculate the break-even point in number of passenger flights. flights Break-even point Without calculations, determine the contribution margin at the break-even point. Break-even point if ticket prices were decreased by 10%, passenger flights would increase by 254. However, total variable costs would increase by the same percentage as passenger Mights. (1) How much would net income be impacted by this change? Net Income (2) Should the ticket price decrease be adopted? Yes Click If you would like to show Work for this questioni Doen Shawweck SAVE FOR LATER Question Attempts Unlimited

Answer 1

margin to Revised Contribution noir and Net Income or Fajr Revenues (soox $108) $54000 Less: $ 21,600 Total variable Cost op ($17260 X 125%) du در امیر Contribution margin Total fixed Cost sit Net Income $32, 400 $23040 Less; $9,360 Net bom $7,680 Income increase $ 9,360 to Price should wes, Decrease in Ticket be adopted to take 21 OOP

Solution 4 Ticket Price per voort west s passenger - $48000 ista yoooh a 9 $120 per Passenger Revised Ticket Price = 120.890% = $108. Revised Number of passenger - Yo0 X 125% asoa

To BEP Top lots - Fixed Cost Etusitule Consibution per passenger $ 23040 $76.8 1,300 Passenger-flight $ sila cy to Ratio OMOC Sontion -3) Contribution Margin at the Break-even Point di Break even Point (in$) x P/v = $36000 x 64% 1 = $230 yot Alternatively, (ie, without Calculations 6 Contribution margin at BEP should be equal to Fixed Cast. ie, $2304o. At the B EP level, wao o contribution margin is equals to fixed Cost.. since, at BEP, thate there is no profit or loss.

Solution (1) Cellulation of Probit volume Patio Pl Radio Contribution to Хm Revenue 30720 . Xlo 48ooo dzi 64% all Break-even Point (in $) = Fixed cost plo Patio osno - $23040 Hot 64% W = $36000 solution 2 de Calculation of Break-even to the point in number cef passenger flight sug Contribution per passenger flight $ 30720 1400 Psg. Flight = $76.8 Per Passenger - flight