Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A typical income statement for one round - trip of one such flight ( flight 4 8 2 ) is as follows: The following additional
A typical income statement for one roundtrip of one such flight flight is as follows:
The following additional information is available about flight :
a Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are paid based on the number of round trips
they complete.
b Onethird of the liability insurance is a special charge assessed against flight because in the opinion of the insurance company,
the destination of the flight is in a "highrisk" area. The remaining twothirds would be unaffected by a decision to drop flight
c The baggage loading and flight preparation expense is an allocation of ground crews' salaries and depreciation of ground
equipment. Dropping flight would have no effect on the company's total baggage loading and flight preparation expenses.
d If flight is dropped, Pegasus Airlines has no authorization at present to replace it with another flight.
e Aircraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible.
f Dropping flight would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its
payroll.
Required:
What is the financial advantage disadvantage of discontinuing flight
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started