The income statement from the annual report of United Airlines appears below in summary form.

Required

a. Identify the costs that are likely to be variable and support your answer with an explanation.

b. Identify the costs that are likely to be fixed and support your answer with an explanation.

c. Indicate which costs are difficult to categorize as variable or fixed and support your answer with an explanation.

Transcribed Image Text:

Revenue Expenses: United Airlines Consolidated Income Statement For the Year Ended December 31 (in millions) Aircraft fuel Salaries and related costs Landing fees and other rent Aircraft maintenance Cost of sales Aircraft rent Commissions Other expenses Loss from operations 2005 $17,379 (4,032) (4,027) (915) (881) (685) (402) (305) (6,351) $ (219)