Profits have been decreasing for several years at 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 flight (flight 482) Is as follows: $ 16,560 1,296 15,264 100.00 7.8 92.28 Ticket revenue (180 neata * 408 occupancy * $230 ticket price) Variable expenses ($18.00 per person) Contribution margin Flight expenses Salarien, flight crew Plight promotion Depreciation of aircraft Fuel for aircraft Liability insurance Salaries, flight ansintants Baggage loading and flight preparation Overnight coats for flight crew and Gintanta at destination Total Elight expenses Net operating losa $ 1,800 770 1,650 5,400 4.800 1,200 1.800 700 18, 120 $ 12,856) The following additional Information is available about flight 482: a. 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. 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 flight 482. c. 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 company's total baggage loading and flight preparation expenses. d. If flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another flight e. Alrcraft 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 arcraft In its fleet or the number of flight crew on its payroll. Required: 1. What is the financial advantage (disadvantage) of discontinuing flight 482? (Prepared from a situation suggested by Professor John W. Hardy.) Lone Star Meat Packers is a major processor of beef and other meat products. The company has a large amount of T-bone steak on hand, and it is trying to decide whether to sell the T-bone steaks as they are Initially cut or to process them further into filet mignon and the New York cut. If the T-bone steaks are sold as initially cut, the company figures that a 1-pound T-bone steak would yield the following profit: Selling price ($2.20 per pound) # 2.20 Lens joint conta incurred up to the split-off point where T- bone atook can be identified as a separate product Profit per pound If the company were to further process the T-bone steaks, then cutting one side of a T-bone steak provides the filet mignon and cutting the other side provides the New York cut One 16 ounce T-bone steak cut in this way will yield one 6-ounce filet mignon and one 8-ounce New York cut , the remaining ounces are waste. It costs $0.16 to further process one T-bone steak into the filet mignon and New York cuts. The filet mignon can be sold for $4.40 per pound, and the New York cut can be sold for $3.40 per pound. Required: 1. What is the financial advantage (disadvantage of further processing one T-bone steak into filet mignon and New York cut steaks? 2. Would you recommend that the T-bone steaks be sold as initially cut or processed further? 1.60 $ 0.60 Complete this question by entering your answers in the tabs below. Required: Required 2 What is the financial advantage (disadvantage) of further processing one T-bone steak into filet mignon and New York cut steaks? (Do not round intermediate calculations. Round your answer to 2 decimal places.) per unit