Problem 13-21 (Algo) Dropping or Retaining a Flight [LO13-21 Profits have been decreasing for several ye sat Pegasus Airlines. In an effort to improve the company's performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical Income statement for one round-trip of one such filight (flight 482) is as follows: $16, 720 1,444 15, 276 100. 8.6 91.4% Ticket revenue (190 seats 40% occupancy * $220 ticket price) Variable expenses ($19.88 per person) Contribution margin Flight expenses Salaries, flight crew Flight promotion Depreciation of aircraft Fuel for aircraft Liability Insurance Salaries, flight assistants Baggage Loading and flight preparation Overnight costs for flight crew and assistants at destination Total flight expenses Net operating loss $ 1,90 760 1,880 5,300 5,100 1.38e 1.700 700 18,560 $0.284) The following additional information is available about fight 482 a. Members of the flight crew are paid fixed annual salaries, where she flight assistants are paid based on the number of round trips they complete b One-third of the ability Insurance is a special charge assessed against flight 482 because in the opinion of the Insurance company. the destination of the flight isina "high-risk" area. The remaining two-thirds would be unaffocted by a decision to drop flight 482 c. The baggage loading and fight preparation expense is an alocation of ground crews' salaries and depreciation of ground equipment Dropping fight 482 would have no effect on the company's total baggage loading and light preparation expenses d. I flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another fight. Alrcraft depreciation is due entirely to obsolescence Depreciation due to wear and tear is negligible Dropping fight 482 would not allow Pegasus Airlines to reduce the number of arcraft in its fleet or the number of light crew on its Dayroll Required: What is the financial advantage disadvantage of anscontinuing fight 4827