Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pac Coast Airlines has been incurring losses for the past few years. In an attempt to improve the overall financial performance of the company, the

Pac Coast Airlines has been incurring losses for the past few years. In an attempt to improve the overall financial performance of the company, the general manager is considering discontinuing several of the flights. Flight 84 from Boston, Massachusetts to Moscow, Russia is one such flight. The contribution margin statement for this particular flight is shown below.

Pac Coast Airlines - Flight 84 Contribution Margin Statement for the Segment For the Year Ended September 30, 2019
Revenue $2,146,000
Variable Costs $1,507,000
Contribution Margin $639,000
Fixed Costs $683,000
Operating Income $-44,000

The following additional information is also available regarding flight 84:

  • 74% of the segment's fixed costs will remain with the company if the flight is discontinued. The remaining amount of fixed costs will no longer be incurred by the company if the flight is discontinued.
  • If the flight is discontinued, contribution margin will increase by a total of $246,000 in other segments of Pac Coast Airlines.

Calculate the following items: Do not enter dollar signs or commas in the input boxes. Use the negative sign for negative values or items that are subtracted.

Lost Contribution Margin - Flight 84 $Answer
Avoidable Fixed Costs $Answer
Incremental Contribution Margin - Other Segments $Answer
Incremental Effect $Answer

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Systems

Authors: Ronald W. Hilton, David E. Platt

10th Edition

1308172486, 978-1308172484

More Books

Students also viewed these Accounting questions

Question

What main difficulty occurs with contiguous allocation?

Answered: 1 week ago

Question

Distinguish between operating mergers and financial mergers.

Answered: 1 week ago