7 Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve...

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7 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 (188 seats 48% occupancy $242 ticket price) Variable expenses 1518.00 per person) Contribution margin FLight expenses Salaries, flight.com FLight promotion Depreciation of aircratc Fuel for aircraft Liability insurance Salaries, flight assistants Baggage loading and flight preparation Overnight costs for flight crew and assistants at destination Total flight expenses Net operating lass $17,280 3,296 100.0% 7.5 15,984 92.5% $ 1.000 1,550 5,600 5,100 1,400 1,000 540 10,30 (2,366) The following additional information is available about flight 482 a. Members of the tight crew are paid fixed annual salaries, whereas the flight assistants are paid based on the number of round trips they complete b. One-third of the ability insurance is a special charge assessed against night 482 because in the opinion of the insurance company the destination of the tight is in a "high-risk" area. The remaining two-thirds would be unaffected by a decision to drop flight 482 The baggage loading and flight preparation expense is an allocation of ground crews' salaries and depreciation of ground equipment, Dropping flight 482 would have no effect on the company's total baggage loading and flight preparation expenses d if fight 482 is dropped, Pegasus Airlines has no muthorization al present to replace it with another flight e. Aircraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible. Dropping flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its payroll Required 1 What is the financial advantage (disadvantage) of discontinuing fight 4827 Required: 1. What is the financial advantage (disadvantage) of discontinuing flight 4827 7 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 (188 seats 48% occupancy $242 ticket price) Variable expenses 1518.00 per person) Contribution margin FLight expenses Salaries, flight.com FLight promotion Depreciation of aircratc Fuel for aircraft Liability insurance Salaries, flight assistants Baggage loading and flight preparation Overnight costs for flight crew and assistants at destination Total flight expenses Net operating lass $17,280 3,296 100.0% 7.5 15,984 92.5% $ 1.000 1,550 5,600 5,100 1,400 1,000 540 10,30 (2,366) The following additional information is available about flight 482 a. Members of the tight crew are paid fixed annual salaries, whereas the flight assistants are paid based on the number of round trips they complete b. One-third of the ability insurance is a special charge assessed against night 482 because in the opinion of the insurance company the destination of the tight is in a "high-risk" area. The remaining two-thirds would be unaffected by a decision to drop flight 482 The baggage loading and flight preparation expense is an allocation of ground crews' salaries and depreciation of ground equipment, Dropping flight 482 would have no effect on the company's total baggage loading and flight preparation expenses d if fight 482 is dropped, Pegasus Airlines has no muthorization al present to replace it with another flight e. Aircraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible. Dropping flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its payroll Required 1 What is the financial advantage (disadvantage) of discontinuing fight 4827 Required: 1. What is the financial advantage (disadvantage) of discontinuing flight 4827