Exercise 19-4 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 fares)	$51,000
Variable costs
Fuel	$17,250
Snacks and drinks	790
Landing fees	1,850
Supplies and forms	1,020	20,910
Contribution margin	30,090
Fixed costs
Depreciation	3,000
Salaries	14,987
Advertising	470
Airport hanger fees	1,780	20,237
Net income	$9,853

Calculate the break-even point in (1) dollars and (2) number of fares. (Round answers to 0 decimal place, e.g. 1,225.)

1.	Break-even point	$
2.	Break-even point		fares

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

Break-even point

$

If fares were decreased by 10%, an additional 100 fares could be generated. However, total variable costs would increase by 20%. (Round answers to 0 decimal place, e.g. 1,225.) (1)How much would net income be impacted by this change? Net income

to $

(2)Should the fare decrease be adopted?