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Profits have been decreasing for several years at Pegasus Airlines In an effort to improve the company's performance, consideration is being given to dropping several
Profits have been decreasing for several years at Pegasus Airlines 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 one round-trip of one such flight (flight 482) is as follows Ticket revenue 120 seats x 40% occupancy x $65 ticket price 3,120 100% Variable expenses ($13.00 per person) 624 20 Contribution margin 2.496 80% Flight expenses Salaries, flight crew 350 700 Flight promotion Depreciation of aircraft 510 Fuel for aircraft 180 240 Liability insurance 690 Salaries, flight assistants 185 Baggage loading and flight preparation Overnight costs for flight crew and assistants at destination 60 2,915 Total flight expenses (419) Net operating loss
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