Need help with the Question. Just need to answer A at the bottom

24. Acme Aviation (AA) entered into an agreement with Fast Deliveries (FD) for AA to fly packages for FD on an as needed" basis. The agreement was for three years. After the first year, AA was not mak- ing any money on this agreement and notified FD that it would no longer honor the agreement. FD was forced to find another company to fly the pack- ages that previously would have been flown by AA. FD claimed that the cost of the new carrier added $250,000 a year to its expenses. Four years after AA defaulted on the contract, FD filed for bankruptcy. In a subsequent lawsuit, Fast Deliveries sued Acme Aviation for $6 million, claiming that AA's de- fault on the delivery contract caused FD to incur sig- nificant additional costs, and this eventually forced them into bankruptcy. During discovery the follow- ing issues were uncovered: FD used AA for about 20 percent of its deliver- ies during the one year the contract was oper- ating An internal AA memo states that the market- ing manager said, I don't care what our legal obligations are under the contract with FD, we are losing money so end it." (the contract). During the three years prior to the start of the AA/ FD contract, FD had earnings (losses) of $125,000, $(150,000), and $(175,000) respectively. In an AA internal memo, the company stated that it had lost about $300,000 in the first year of the FD contract due, in part, to the varying volume of deliveries requested by FD throughout the year. AA fired the marketing person who secured the FD contract and used the FD contract as an ex- ample of poor analysis of potential sales con- tracts as part of the documentation for the firing An analysis of FD's delivery costs will show that of the $250,000 added expenses incurred with the new (replacement) carrier, direct costs were $140,000 per year higher for the delivery service used to replace AA. The other $110,000 of addi- tional costs was corporate overhead allocated to the delivery service contract. FD's financial statements showed that it had loss- es of $(175,000) and $(260,000) during the two years after the end of the AA contract but before FD filed for bankruptcy. FD's asset book value at the date bankruptcy was filed was $3,500,000, but the estimated liqui- dation value of its assets was estimated at only $1,000,000 An FD accounting department analysis estimated that during a six-month period after AA defaulted on the delivery contract, FD had trouble finding acceptable delivery alternatives. As a result, the analysis found that the firm lost approximately $800,000 in delivery sales. (For your calculations, assume a 40 percent contribution margin.) The issue of liability here is primarily a legal one. There is little chance that accounting issues will be addressed in determining liability. For purposes of this conflict, assume that the three-year contract was binding and the court ruled that AA is liable for damages resulting from the two years it did not honor the contract. a. You are an expert that has been hired by Fast Deliveries to develop a damages estimate for them that you will defend in deposition and at trial, if necessary. Using the information pro- vided prepare a preliminary damages estimate and explain the basis for your opinion on each item. Identify any questions or information you would like to see or analyze to support your damages estimate