Exercise 6 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 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 $17,040 Snacks and drinks 780 Landing fees 2,100 Supplies and forms 1,200 21,120 Contribution margin 26,880 Fixed costs Depreciation 3,050 Salaries 11,900 Advertising 300 Airport hanger fees 1,550 16,800 Net income $10,080 Calculate the break even point in dollars Break even point $ LINK TO TEXT Calculate the break even point in number of passenger flights Break even point flights LINK TO TEXT Without calculations, determine the contribution margin at the break even point Break even point $ LINK TO TEXT 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 increasesdecreases to $ (2) Should the ticket price decrease be adopted NoYes

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Exercise 6-4 Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat

Exercise 6-4

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 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	$17,040
Snacks and drinks	780
Landing fees	2,100
Supplies and forms	1,200	21,120
Contribution margin		26,880
Fixed costs
Depreciation	3,050
Salaries	11,900
Advertising	300
Airport hanger fees	1,550	16,800
Net income		$10,080

Calculate the break-even point in dollars.

Break-even point

LINK TO TEXT

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

Break-even point

flights

LINK TO TEXT

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

Break-even point

LINK TO TEXT

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

increasesdecreases

to $

(2) Should the ticket price decrease be adopted?

NoYes