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need help! will upvote:) Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, the company is
need help! will upvote:)
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (Ilight 482 ) is as follows: The following additional information is available about flight 482: a. Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are pald based on the number of tound trips they complete. b. One-third of the liability insurance is a special charge assessed against fight 482 because in the opinion of the insurance company. the destination of the filght is in a "high-risk" area. The remaining two-thirds would be unaffected by a decision to drop flight 482 c. The baggage loading and flight preparation expense is an allocation of ground crews' salaries and depreciation of ground equipment. Dropping fight 482 . would have no effect on the company's total baggage londing and flight preparation expenses: d. If filght 482 is dropped, Pegasus Airlines has no authorizotion at present to replace it with another flight. e. Aircraft depreciation is due entirely to obsolescence. Depreciation due to wear and teat is negligible. t. Dropping filght 482 would not allow Pegosus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its paytoll Step by Step Solution
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