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Please answers all questions a, b, c, d. Make a Decision Yield Pricing in Service Businesses, MAD 11-1 Analyze Pacific Airways Obj. 4 Pacific Airways
Please answers all questions a, b, c, d.
Make a Decision Yield Pricing in Service Businesses, MAD 11-1 Analyze Pacific Airways Obj. 4 Pacific Airways provides air travel services between Los Angeles and Seattle. Cost Information per fight is as follows: Fixed Costs per Flight Variable Costs per Passenger Plane depreciation $ 9.500 Crew salaries 900 Fuel 2,500 518 Ground salaries 1,100 Airport fees 2,100 Passenger services Total $16.100 540 10 Each night has a capacity of 150 seats, with an average of 125 seats sold per flight at an aver. age ticket price of $180. Assume Pacific Airways is considering a new service that would provide tickets at half price. Passengers would need to fly standby to receive the discount, but would be provided a flight for a given day of travel. An analysis revealed that an average of 8 existing pas. sengers would use the new discounted tickets for travel. In addition, 15 new passengers would be attracted to the offer. a. Determine the contribution margin per passenger for the full priced ticket. b. Determine the break-even number of seats sold per flight. C. Determine the contribution margin per passenger for discounted tickets. d. Should Pacific Airways offer the discounted ticket plan? Answer the question by computing the incremental contribution margin per fight for the planStep by Step Solution
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