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i elmmheducatinncom Module 10 - Chapter 9 0 Saved Help Saved. Em Submit 3 palms Slapped nBook Prlnt Roforc nccs Check my work Prots 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 ights that appear to be unprotable. A typical income statement for one such ight (Flight 482) follows: Ticket revenue (100 seats n so: occupancy x $225 ticket price) $18,000 100.0% Lass: Variable expenses {$13 per person) 1,440 3.0 Contribution margin 16,560 92 .01 Less: Flight expenses: Salaries, flight crew 3,200 Flight promotion 900 Depreciation of aircraft 1,300 Fuel for aircraft 12,000 Liability insurance 3,600 Salaries, flight attendants 500 Baggage loading and flight preparation 2,000 Overnight costs for flight crew and attendants at destination 100 Total flight expenses 24,100 Net operating loss $17,540) The following additional information is available about Flight 482: a. Members of the flight crew are paid fixed annual salaries, whereas the ight attendants are paid by the ight. b. Onethird of the liability insurance is a special charge assessed against Flight 482 because, in the opinion ofthe insurance company, the destination 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 ight preparation expense is an allocation of ground crew's salaries and depreciation of ground equipment. Dropping Flight 482 would have no effect on the company's total baggage loading and ight preparation expenses. Par X B Hor X .O' Das X Sm X QUE X HRPD 7 M21 HR Paraph i Training 53 Types W Training O (1) New PUMA| in Notifica * Homew C ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fnewconnect.mheducation.com%252... # Update : Module 10 - Chapter 9 i Saved Help Save & Exit Submit Check my work 3 a. Members of the flight crew are paid fixed annual salaries, whereas the flight attendants are paid by the flight. b. One-third of the liability insurance is a special charge assessed against Flight 482 because, in the opinion of the insurance company, the destination 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 crew's salaries and depreciation of ground equipment. Dropping Flight 482 would have no effect on the company's total baggage loading and flight preparation expenses. 10 d. If Flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another flight. points e. Depreciation of aircraft is due entirely to obsolescence. Depreciation due to wear and tear is negligible. Skipped f. Dropping Flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its payroll. eBook Required: Print 1. Prepare an analysis showing what impact dropping Flight 482 would have on the airline's profits. (Do not round intermediate calculations. Negative amounts should be indicated with a minus sign.) References Flight costs that can be avoided if the flight is discontinued: $ Mc Graw Hill