Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the companys 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 flight (flight 482) is as follows:Ticket revenue (170 seats 40% occupancy $240 ticket price) $ 16,320 100.0 %Variable expenses ($16.00 per person) 1,088 6.7Contribution margin 15,232 93.3 %Flight expenses:Salaries, flight crew $ 1,700Flight promotion 750Depreciation of aircraft 1,600Fuel for aircraft 5,500Liability insurance 4,800Salaries, flight assistants 1,300Baggage loading and flight preparation 1,900Overnight costs for flight crew and assistants at destination 600Total flight expenses 18,150Net operating loss $ (2,918 )The following additional information is available about flight 482:Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are paid based on the number of round trips they complete.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 flight 482.The baggage loading and flight preparation expense is an allocation of ground crews salaries and depreciation of ground equipment. Dropping flight 482 would have no effect on the companys total baggage loading and flight preparation expenses.If flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another flight.Aircraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible.Dropping flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its payroll.Required:1. What is the financial advantage (disadvantage) of discontinuing flight 482?

Come-Clean Corporation produces a variety of cleaning compounds and solutions for both industrial and household use. While most of its products are processed independently, a few are related, such as the companys Grit 337 and its Sparkle silver polish.Grit 337 is a coarse cleaning powder with many industrial uses. It costs $1.60 a pound to make, and it has a selling price of $11.00 a pound. A small portion of the annual production of Grit 337 is retained in the factory for further processing. It is combined with several other ingredients to form a paste that is marketed as Sparkle silver polish. The silver polish sells for $6.00 per jar.This further processing requires one-fourth pound of Grit 337 per jar of silver polish. The additional direct variable costs involved in the processing of a jar of silver polish are:Other ingredients $ 0.55Direct labor 1.36Total direct cost $ 1.91Overhead costs associated with processing the silver polish are:Variable manufacturing overhead cost 25 % of direct labor costFixed manufacturing overhead cost (per month):Production supervisor $ 3,400Depreciation of mixing equipment $ 1,600The production supervisor has no duties other than to oversee production of the silver polish. The mixing equipment is special-purpose equipment acquired specifically to produce the silver polish. It can produce up to 5,000 jars of polish per month. Its resale value is negligible and it does not wear out through use.Advertising costs for the silver polish total $3,600 per month. Variable selling costs associated with the silver polish are 5% of sales.Due to a recent decline in the demand for silver polish, the company is wondering whether its continued production is advisable. The sales manager feels that it would be more profitable to sell all of the Grit 337 as a cleaning powder.Required:1. How much incremental revenue does the company earn per jar of polish by further processing Grit 337 rather than selling it as a cleaning powder? (Round your intermediate calculations and final answer to 2 decimal places.)2. How much incremental contribution margin does the company earn per jar of polish by further processing Grit 337 rather than selling it as a cleaning powder? (Round your intermediate calculations and final answer to 2 decimal places.)3. How many jars of silver polish must be sold each month to exactly offset the avoidable fixed costs incurred to produce and sell the polish? (Round your intermediate calculations to 2 decimal places.)4. If the company sells 7,900 jars of polish, what is the financial advantage (disadvantage) of choosing to further process Grit 337 rather than selling is as a cleaning powder? (Enter any "disadvantages" as a negative value. Round your intermediate calculations to 2 decimal places.)5. If the company sells 10,700 jars of polish, what is the financial advantage (disadvantage) of choosing to further process Grit 337 rather than selling is as a cleaning powder? (Enter any "disadvantages" as a negative value. Round your intermediate calculations to 2 decimal places.)