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Freeflight Alrlines is presently operating at 70 percent of capacity. Management of the alrline Is considering dropping Freeflight's routes between Europe and the United States.

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Freeflight Alrlines is presently operating at 70 percent of capacity. Management of the alrline Is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue assoclated with the routes would be lost and the related varlable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent. Segmented Income statements for a typical month appear as follows (all amounts in millions of dollars): Required: a. Prepare a dlfferentlal cost schedule. (Select option "Increase" or "decrease", keeplng Status Quo as the base. Select "none" If there Is no effect. Enter your answers In millions rounded to 2 decimal places.) b. Should Freeflight drop the routes between Europe and the United States? Yes No

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