Question
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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started