12 2 man H Profits have been decreasing for several years at Pegasus Aidines. In an effort to improve the company's performance, consideration is being given to dropping several fights that appear to be unprofitable. A typical income statement for one such flight (Flight 482) follows: Ticket revenue (125 at 80% occupancy $450 ticket price) Less: Variable expenses (536 per person) $45,000 100.0% 41,400 Contribution margin tess: Flight Salaries, flight crew Flight promotion Depreciation of aircraft fuel for aircraft Liability insurance Salaries, flight attendants 4,500 13,500 Baggage loating and flight preparation Overnight costs for flight crew and attendents at destination fotal flight expenses Het operating loss (13) The following additional information is available about Flight 482 a. Members of the flight crew are paid foxed annual salaries, whereas the flight attendants are paid by the fight b One-third of the liability insurance is a special charge assessed against Flight 482 because, in the opinion of the insurance company, the destination is in a high-risk area. The remaining two-thirds would be unaffected by a decision to drop Flight 482. c. The baggage loading and flight preparation expense is an allocation of ground crew's salaries and depreciation of ground equipment. Dropping Flight 482 would have no effect on the company's total baggage loading and fight preparation expenses d. If Flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another flight e. Depreciation of aircraft is due entirely to obsolescence. Depreciation due to wear and tear is negligible. t 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. Prepare an analysis showing what impact dropping Flight 482 would have on the airline's profits. (Do not round intermediate calculations. Negative amounts should be indiceted with a minus sign) Help Save & Exit Submit