5-9 Calculate the profit or loss for the indicated volume by following this methodology on bottom page 94 (show work) Fixed Cost $250,000 $65/unit Price Variable Cost $40/unit Contribution $25 Volume to ble 10000 Sales Volume 9,000 10,000 11,000 Volume ble 10,000 10,000 10,000 Difference (1,000) 0 1,000 Contribution $25 $25 $25 Profit or loss $25,000 $0 $25,000 Diff X Contribution This is not a numerical repeat of page 95, but follows the same methodology: Tri-State Airways is considering establishing a route between two cities where the maximum permissible flight per week is 5. Each plane holds 70 passengers. Ticket prices will be $45 per passenger and variable costs (crew, fuel, financing etc) is $30 per passenger. Monthly fixed costs primarily paid to the air terminal for rental of space are $25,000. Show all work. 5-10 How many passengers are necessary to breakeven on a monthly basis? 1666.67 or 1667 passengers EL AutoSave C D aut E o e File Home Insert Draw Design Layout References Marling Review View Help Font Styles ting Editor Route He 5-11 Given 4 weeks in a month, how many passengers are necessary to breakeven on a weekly basi? 416,67 or 417 passengers per week 5-12 Gives Stights per week, how many passengers are necessary to break even on an individual flight o 5.13 Given the concity of the plane, what is your conclusion? We have concluded that all models aproximate reality that is leave out factors that cannot be wanted Give than the output of the brave model that is made useful If you and then you can't model because models are out some of can't be gutted infect, before and based on the quantitative data is necessary to She look at the qualitative factors and how they are the final decision for you would cast for a factory where there were qualified The beauty of the model is that you can see the model and play "What it's change the und variable, but price can be changed so "What increase the price from st get to $55 per passage IT D Tom Paragraph Paste Style Editing Dictate Editor ute Fies Clipboard Vio Edit TF III. The beauty of the ble model is that you can reenter the model and play "What if-Can't change the foued and variable costs, but price can be changed. 50 "What if we increase the price from 545 per passenger to $55 per passenger I 5-14 What is the new.contribution? 5-15 What is the new ble number of passengers on a monthly basis? 5-16 On a weekly basis? 5-17 on an individual flight basis? S-18 Can we start the service now and why? 5-19 While the plane can hold 70 passengers, no airline operates routinely at 100capacity. Suppose that the average number of passengers per plane is 60. Fill in the table to determine annual profitability 50 Average plane carrying 60 passengers Vol passengers Difference Contribution DR X Contribution profilight Prof/week (s flights a week) Tas Product Q O Profit/year (52 weeks/year) Tri-States Airways problem should convince you of the utility of the vol ble model for those situations that can be analyzed by the ble methodology 5-20 People Express page 96 - There are two lessons that can be learned from this mini-case concernin models, what are they? 5-21 What should you expect from hiring a consultant (top page 105)? 5-22 How should you manage a consultant to benefit from above (bottom page 96)? 5-23 Productivity page 98 - productivity is defined as output/input where input is the dollar value of the hours of the various type workers. Output has gone up by 20% from 1000 to 1200, yet productivity has declined. Why? Productivity has gone way up on reduced number of employees as exemplified by the reduced number of personnel at my local bank serving the same population of dients on page 99. Notice that a big part of the reduction of personnel is the adoption of robot technology. You probably don't consider an ATM as a robot, but doesn't it accept deposits and dispense cash like it was a robot? And doesn't this robot Page 1 3050 woede 09 Ditour an O O TI