ezto Chapter 10 Homework Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, consideration is being given to 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 (105 seats x 40% $2,520 100% occupancy x $60 ticket price) Variable expenses ($13.00 per person) 546 21.7 Contribution margin 1,974 78.3% Flight expenses Salaries, flight crew Fight promotion Depreciation of aircrat Fuel for aircraft Liability insurance Salaries, flight assistants Baggage loading and Bight preparation Overnight costs for fight crew and assistants at destination $ 380 690 380 155 180 710 200 50 2,745 s (771) Total flight expenses Net operating loss The following additional information is available about flight 482 a. Members of the fight crew are paid fixed annual salaries, whereas the fight assistants are paid based on the number of round trips they complete. Ore' third of the lablity nsurance is a specialcharge assessed against fight 4a2 because n te opinion ol the insurance company, would be unaflected by a decision to drop fight 482 the destinaton of the fight is in a "high-risk" area. The remaining two-thirds c. The baggage l oading 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 fight preparation expenses. Airlines has no authorization at present to replace t with another fight d. I tight 482 is dropped, Pegasus e. Aircraft depreciation is due entrely to obsclescence. Depreciation due to wear and tear is negligible t Dropping fight 482 would not alow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of fight crow on its payrol Required: what impact dropping fight 482 would have on the airline's profts. (L