Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfis base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent months activity in the form of a cost-volume-profit income statement.

Fare revenues (400 passenger flights)				$48,000
Variable costs
Fuel		$17,320
Snacks and drinks		700
Landing fees		1,900
Supplies and forms		1,200		21,120
Contribution margin				26,880
Fixed costs
Depreciation		3,100
Salaries		13,280
Advertising		600
Airport hanger fees		1,500		18,480
Net income				$8,400

Calculate the break-even point in dollars.

Break-even point

$

Calculate the break-even point in number of passenger flights.

Break-even point

flights

Without calculations, determine the contribution margin at the break-even point.

Break-even point

$

If ticket prices were decreased by 10%, passenger flights would increase by 25%. However, total variable costs would increase by the same percentage as passenger flights. (1) How much would net income be impacted by this change?

Net income decreasesincreases to $

(2) Should the ticket price decrease be adopted? NoYes