Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company’s performance, the company is thinking about dropping several flights that appear to be unprofitable.
A typical income statement for one round-trip of one such flight (flight 482) is as follows:
What is the financial advantage or disadvantage of discontinuing flight 482?
1.
Contribution margin lost if the tour is discontinued | -$2,898 | |
Less flight costs that can be avoided if the flight is discontinued: | ||
Flight promotion | $710 | |
Fuel for aircraft | $170 | |
Liability insurance($210 * 1/3) | $70 | |
Salaries, flight assistants | $730 | |
Overnight costs for flight crew and assistants | $80 | $1,760 |
Net increase (decrease) in profits if the flight is discontinued | -$1,138 |
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: $ 3,150 462 2,688 100.00 14.7 85.38 Ticket revenue (105 seats x 408 occupancy $75 ticket price) Variable expenses ($11.00 per person) Contribution margin Flight expenses: Salaries, flight crew Flight promotion Depreciation of...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: $ 17,500 100.0% 1,3307 .6 16,170 92.4% Ticket revenue (175 seats x 40% occupancy x $250 ticket price) Variable expenses ($19.00 per person) Contribution margin Flight expenses: Salaries, flight crew Flight promotion Depreciation...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company’s performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: Ticket revenue (185 seats × 40% occupancy × $230 ticket price) $ 17,020 100.0 % Variable expenses ($16.00 per person) 1,184 7 Contribution margin 15,836 93 % Flight expenses: Salaries, flight crew $...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company’s performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: Ticket revenue (195 seats × 40% occupancy × $200 ticket price) $ 15,600 100.0 % Variable expenses ($16.00 per person) 1,248 8 Contribution margin 14,352 92 % Flight expenses: Salaries, flight crew $...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: $ 16,800 1,400 15,400 100.0% 8.3 91.7% Ticket revenue (175 seats x 40% occupancy X $240 ticket price) Variable expenses ($20.00 per person) Contribution margin Flight expenses: Salaries, flight crew Flight promotion Depreciation...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company’s performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: Ticket revenue (175 seats × 40% occupancy × $220 ticket price) $ 15,400 100.0 % Variable expenses ($18.00 per person) 1,260 8.2 Contribution margin 14,140 91.8 % Flight expenses: Salaries, flight crew $...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company’s performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: Ticket revenue (190 seats × 40% occupancy × $220 ticket price) $ 16,720 100.0 % Variable expenses ($17.00 per person) 1,292 7.7 Contribution margin 15,428 92.3 % Flight expenses: Salaries, flight crew $...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: $18,500 1,258 17, 242 100.0% 6.8 93.2% Ticket revenue (185 seats 40% occupancy X $250 ticket price) Variable expenses ($17.00 per person) Contribution margin Flight expenses: Salaries, flight crew Flight promotion Depreciation of...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company’s performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: Ticket revenue (105 seats × 40% occupancy × $75 ticket price) $ 3,150 100.0 % Variable expenses ($10.00 per person) 420 13.3 Contribution margin 2,730 86.7 % Flight expenses: Salaries, flight crew $...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: points $ 16,500 1,254 15, 246 100.0% 7.6 92.48 eBook Print Ticket revenue (165 seats x 40% occupancy x $250 ticket price) Variable expenses ($19.00 per person) Contribution margin Flight expenses : Salaries,...