55.00 2.1 Futura Company purchases the 75.000 starters that it installs in its standard line of farm tractors from a supplier for the price of $12.00 perunt. Due to a reduction in output, the company now has idle capacity that could be used to produce the starters rather than buying them from an ohide supplier However the company's chief engineer is opposed to making the starters because the production cost per unas 53.20 as shown below Penit Yotal DEPEN re 2.60 $ 150.000 Desti 397.50 wie andering wheel tal product $13.20 Futura decides to make the starters, a supervisor would have to be hired at a salary of $150,000 to oversee production. However, the company has suficient de tools and machinery such that no new equipment would have to be purchased. The rent charge above based on specized in me plant. The total rent on the plant is $88.000 per period. Depreciation is due to obsolescence rather than wear and te 1. 0.70 . Required What is the financial advantage deadvantage of making the 75.000 starters instead of buying them from an outside supper? 5.10 Profts 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 fight (ght 482) is as follows Ticket revenue (190 seats occupancy $250 tichat price) $ 17,450 100.0 Varie (15.0 per person) Contribution margin 15,264 Yhteenst Salaries, niet te $ 1,700 Flight promotion 750 Depreciation of aircraft 1.5 for aircraft 5,700 Llity trace Salaries, et assistant 1,500 top loading and light preparation 1,950 weit costs for rent cree and assistants et destination Total light expenses 10010 et serinless 102.546) The following additional information is available about fight 482 a. Members of the flight crew are paid fixed annual salaries, whereas the fight assistants are paid based on the number of round tips they complete b. One third of the ability insurance is a special charge assessed against fight 482 because in the opinion of the insurance company, the destination of the flight 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 crews salaries and depreciation of ground equipment Dropping fight 482 would have no effect on the company's total baggage loading and light preparation expenses dif fight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another flight Arcra depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible Dropping Night 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of light crew on its payroll request the financial advantage lidsadvantages of Bascontinuing highe 482
