II The baggage loading and flight preparation expense is an allocation of ground crews salaries and depreciation of ground equipment. Dropping Flight 251'] would have no effect on the company's total baggage loading and ight pre. Expenses II If flight 250 is dropped, AirEanda has no authorization at present to replace with another flight - Depreciation of aircraft is due entirely to obsolesce. Depreciation due to wear and tear is negligible. II Dropping flight 250 would not allow AirEanada to reduce the number of aircraft in its eet or the number of flight crew on its payroll. Required: 1] Prepare an analysis showing what impact dropping Flight 25D would have in the airline's profits 2] The airline's scheduling officer has been criticized because only about Emil; of the seats on AirCanada's flights are being filled, compared with an ayerage of 513% for the industry. The scheduling officer has explained that AirEanada's ayerage seat occupancy could be improyed considerable by eliminating about 113% of the flights but that doing so would reduce prots. Explain how this could happen. Profits have been decreasing for several year at AirCanada. 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 on such flight (Flight 250) is a follow's: Ticket Revenue (175 seats x 40% $28,000 100% occupancy x $200 ticket price Less: Variable expenses 2,100 7.5 ($15/person) Contribution Margin 25,900 92.5% Less: Flight expenses Salri4s, flight crew 3,600 Flight promotion 1,500 Depreciation of aircraft 3,100 Fuel for aircraft 13,600 Liability insurance 8,400 Salaries, flight attendants 1,000 Baggage and flight prep. Costs 3,400 Overnight costs for flight crew 600 Total flight expenses 35,200 Net Operating loss ($9,300)The following additional information is available for Flight 250: II Members of the flight crew are paid fixed annual salaries, whereas the flight attendants are paid by the flight II Dn-third of the liabilityI insurance is a special charge assessed against Flight 25G because in the opinion of the insurance com pa \"'3', the destination is in a highrisk area. The remaining two-third would be unaffected by the decision to drop flight 25G