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please help me solve this problem. Profits have been decreasing for several years at Pegasus Airlines in an effort to improve the company's performance, the
please help me solve this problem.
Profits have been decreasing for several years at Pegasus Airlines in an effort to improve the company's performance, the company thinking about dropping several flights that appear to be unprofitable A typical income statement for one round trip of one such flichtflight 482) is as follows $16.100 1.100 14,914 10. 7.4 Ticket revenue (175 seats tax nccupancy $29 ticket price) Variable expenses (517.00 per person) Contribution margin Flict expenses Salaries, Flight crew Flight promotion Depreciation of aircraft Fuel for aircraft Llallity insurance Salariess flight assistants Han loading and Flight preparation Overnight costs for flight crew and assistants at destination Total t expenses Net operating loss 750 1,550 0.000 5.10 1,500 E 574,150 The following additional information is available about tight 482 a. Members of the flight crew are paid fixed annual salaries, whereas the assistants are pad based on the number of round ta thum The following additional information is available about flight 482 a. Members of the fogh crew are paid Tied annual salaries, whereas the flight assistants are paid based on the number of round trips they complete 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 of the flight is in a high risk area. The remaining two-thirds would be unaffected by a decision to drop fight 482 The baggage loading and Might preparation expense is an allocation of ground crews'salaries and depreciation of ground equipment Dropping flight 182 would have no effect on the company's total baggage loading and fight preparation expenses d. If flight 482 is topped, Pegasus Airlines has no authorzation present to replace it with another flight e Aircraft depreciation is due entirely to obsolescence Depreciation due to wear and tears negligible 1 Dropping flight 482 would not allow Pegasus Airlines to reduce the number of alctat in its fleet or the number of light crew on its payroll Required: 1 What is the financial advantage disadvantage of discontinuing Mat 4827Step by Step Solution
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