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 Comfi's base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent month's activity in the form of a cost-volume-profit income statement.

Fare revenues (400 passenger flights). $48,000

Variable costs

Fuel$14,000

Snacks and drinks800

Landing fees2,000

Supplies and forms1,200 18,000

Contribution margin30,000

Fixed costs

Depreciation. 3,000

Salaries 15,000

Advertising 500

Airport hanger fees. 1,750. 20,250

Net income $9,750

Break-even point in dollars. $32400

Break-even point in number of passenger flights 270

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

Break-even point $________

b. If fares were decreased by 10%, an additional 100 fares could be generated. However, total variable costs would increase by 20%.

1. How much would net income be impacted by this change?

Net incomedecreases / increases to $