Profits have been decreasing for several year at AirCanada. In an effort to improve the company's performance, consideration is being given to dropping several flights that appear to be unprofitable. A typical income statement for on such flight (Flight 250) is a follow's: Ticket Revenue (175 seats x 40% $28,000 100% occupancy x $200 ticket price Less: Variable expenses 2,100 7.5 ($15/person) Contribution Margin 25,900 92.5% Less: Flight expenses Salri4s, flight crew 3,600 Flight promotion 1,500 Depreciation of aircraft 3,100 Fuel for aircraft 13,600 Liability insurance 8,400 Salaries, flight attendants 1,000 Baggage and flight prep. Costs 3,400 Overnight costs for flight crew 600 Total flight expenses 35,200 Net Operating loss $9,300)The following additional information is ayailable for Flight 250: I Members of the flight crew are paid fixed annual salaries, whereas the flight attendants are paid by the flight I Dn-third of the liabilityI insurance is a special charge assessed against Flight 2512] because in the opinion of the insurance company, the destination is in a highrisk area. The remaining two-third would be unaffected by the decision to drop flight 2511!. I The baggage loading and flight preparation expense is an allot ation of ground crews salaries and depreciation of ground equipment. Dropping Flight 2511] would have no effect on the company's total baggage loading and ight pre. Expenses I If flight 250 is dropped, AirEanda has no authorization at present to replace with another flight I Depreciation of aircraft is due entirely to obsolesce. Depreciation due to wear and tear is negligible. I Dropping flight 250 would not allow AirEanada to reduce the number of aircraft in its eet or the number of flight crew on its payroll. Required: 1] Prepare an analysis showing What impact dropping Flight 1513 would have in the airline's profits 2] The airline's scheduling officer has been criticized because only about 50% of the seats on AirCanada's flights are being filled, compared with an average of was for the industry. The scheduling officer has expiained that AirEanada's average seat occupancy could be improved considerable by eliminating about 113% of the flights but that doing so would reduce prots. Explain hDW this could happen