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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

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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 (fight 482) is as follows 317,750 1,184 15,575 9). Toket revente (15 satsa oceupancy $240 Variable expenses (526.00 per person) Contebution margin 15ght expo Salaries, chce Flight promotion Depreciation of aircraft Fuel for aircraft Liability insurance Salaries, light assistants Bare loading and fight preparation Overeight costs for light crew and assistants o destination Total nicht expenses Net operating loa $ 1,500 750 1,650 ) 400 1.750 600 18.050 301.674) The following additonal information is available about fight 482 a. Members of the night crew are pala fixed annual salaries, whereas the flight assistants are paid based on the number of round trips b.One-third of the liability Insurance is a special charge assessed against fight 482 because in the opinion of the insurance company the destination of the flight in a "high-rikares. The remaining two thirds would be unaffected by a decision to drop flight 482 c The baggage loading and fight preparation expense 15 an allocation of ground crews'salanes and depreciation of ground equipment Dropping night 482 would have no effect on the company's total baggage loading and night preparation expenses dif fight 482 s dropped, Pegasus Airlines has no authorition at present to replace it with another flight e. Aircraft 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 feet or the number of flight crew on its payroll Required: What is the financial advantage (disadvantage of discontinuing night 1927

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