Chapter 13 - Extra Credit - Homework - Algorithmic 1 Problem 13-21 (Algo) Dropping or Retaining...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/6657df8a90baa_8906657df8a88e20.jpg)
Transcribed Image Text:
Chapter 13 - Extra Credit - Homework - Algorithmic 1 Problem 13-21 (Algo) Dropping or Retaining a Flight [LO13-2] 50 points Saved Profits 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 flight (flight 482) is as follows: Ticket revenue (160 seats x 40% occupancy eBook Print x$230 ticket price) Contribution margin Flight expenses: Salaries, flight crew Flight promotion $ 14,720 Variable expenses ($16.00 per person) 1,024 100.0% 7 13,696 93% Depreciation of aircraft Fuel for aircraft References Liability insurance Salaries, flight assistants Baggage loading and flight preparation Overnight costs for flight crew and assistants at destination Total flight expenses Net operating loss $ 1,700 780 1,600 5,600 5,400 1,200 1,700 700 18,680 $ (4,984) The following additional information is available about flight 482: 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. One-third of the liability insurance is a special charge assessed against flight 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 flight 482 would have no effect on the company's total baggage loading and flight preparation expenses. d. If flight 482 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 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. What is the financial advantage (disadvantage) of discontinuing flight 482? Chapter 13 - Extra Credit - Homework - Algorithmic 1 Problem 13-21 (Algo) Dropping or Retaining a Flight [LO13-2] 50 points Saved Profits 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 flight (flight 482) is as follows: Ticket revenue (160 seats x 40% occupancy eBook Print x$230 ticket price) Contribution margin Flight expenses: Salaries, flight crew Flight promotion $ 14,720 Variable expenses ($16.00 per person) 1,024 100.0% 7 13,696 93% Depreciation of aircraft Fuel for aircraft References Liability insurance Salaries, flight assistants Baggage loading and flight preparation Overnight costs for flight crew and assistants at destination Total flight expenses Net operating loss $ 1,700 780 1,600 5,600 5,400 1,200 1,700 700 18,680 $ (4,984) The following additional information is available about flight 482: 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. One-third of the liability insurance is a special charge assessed against flight 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 flight 482 would have no effect on the company's total baggage loading and flight preparation expenses. d. If flight 482 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 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. What is the financial advantage (disadvantage) of discontinuing flight 482?
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
In Eq.38-18 keep both terms, putting A - B ? ? 0 the equation then describes the superposition of two matter waves of equal amplitude, traveling in opposite directions. (Recall that this is the...
-
Assume theHong Kong dollar (HK$) value is tied to the U.S. dollar and will remain tied to the U.S. dollar. Last month, a HK$ = 0.25 Singapore dollars. Today, a HK$ = 0.30 Singapore dollars. Assume...
-
Adams, Inc., pays its employees' weekly wages in cash. A supplementary payroll sheet that lists the employees' names and their earnings for a certain week is shown below. Complete the payroll sheet...
-
Tempo Company's fixed budget (based on sales of 16,000 units) follows. Fixed Budget Sales (16,000 units x $207 per unit) Costs Direct materials Direct labor Indirect materials Supervisor salary Sales...
-
At December 31, 2026, N37r-Zo Company's unadjusted trial balance reported the following accounts: Accounts Payable ............ $36,000 Accounts Receivable ......... $65,000 Accumulated Depreciation...
-
The Successful Association for Revitalization and Development ( SARD ) wants to redevelop a building into affordable rental housing. The costs of the project are: Property Acquisition: $ 2 6 0 , 0 0...
-
The water viscosity at reservoir condition is 0.95cp and the permeability of the formation is 300 mD. Below figure 2.30 shows a water formation dipping with a 15 angle. Points A, B, & C fall on the...
-
Netflix began as a DVD rental business. For a monthly fee, you could borrow as many DVDs as you liked. They would arrive by mail, and you would return them also by mail when you were done. With this...
-
You have just been hired as a Human Resource Manager in a small, but rapidly growing organization with 160 employees. During the interview and selection process, the CEO stated that the reason an HRM...
-
2. Move ranges B15:L30 to C15:M30 (All the cells should shift to the right). In the range B17:B29, insert a Sparkline for the range of cells C17:F29. 3. In the range C17:F29, insert Conditional...
-
Lori Callebaut opened Callebaut Cleaning Service, AG on July 1, 2017. During July the following transactions were completed. July 1 Shareholders invested 20,000 cash in the business in exchange for...
-
Which of the following will not result in a change in the owner's capital? a. A non-current asset bought by the business for 10,000 b. A profit made by the organisation c. A loss made by the...
-
a For each of the following transactions, show the effect (as pluses and minuses) on assets, liabilities and capital. The first has been completed for illustration. Assets Liabilities Capital +10,000...
-
Goods bought for resale will be debited to the: a. Inventory account b. Office expenses account c. Sales account d. Purchases account
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App