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 (170 seats × 40% occupancy × $250 ticket price) |
$ |
17,000 |
100.0 |
% |
||
Variable expenses ($17.00 per person) |
1,156 |
6.8 |
||||
Contribution margin |
15,844 |
93.2 |
% |
|||
Flight expenses: |
||||||
Salaries, flight crew |
$ |
1,600 |
||||
Flight promotion |
790 |
|||||
Depreciation of aircraft |
1,700 |
|||||
Fuel for aircraft |
5,900 |
|||||
Liability insurance |
5,400 |
|||||
Salaries, flight assistants |
1,300 |
|||||
Baggage loading and flight preparation |
1,800 |
|||||
Overnight costs for flight crew and assistants at destination |
600 |
|||||
Total flight expenses |
19,090 |
|||||
Net operating loss |
$ |
(3,246 |
) |
|||
The following additional information is available about flight 482:
Required:
1. What is the financial advantage (disadvantage) of discontinuing flight 482?
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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: Ticket revenue (115 seats × 40% occupancy × $70 ticket price) $ 3,220 100.0 % Variable expenses ($14.00 per person) 644 20 Contribution margin 2,576 80 % Flight expenses: Salaries, flight crew $ 380...
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 (165 seats × 40% occupancy × $220 ticket price) $ 14,520 100.0 % Variable expenses ($19.00 per person) 1,254 8.6 Contribution margin 13,266 91.4 % 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 (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: 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: 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: $ 15,840 1,296 14,544 100.0% 8.2 91.8% Ticket revenue (180 seats x 40% occupancy * $220 ticket price) Variable expenses ($18.00 per person) Contribution margin Flight expenses: Salaries, flight crew Flight promotion Depreciation...