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Profits have been decreasing for several years at Pegasus Alrlines. In an effort to improve the company's performance, consideration is belng given to dropping several

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Profits have been decreasing for several years at Pegasus Alrlines. In an effort to improve the company's performance, consideration is belng given to dropping several flights that appear to be unprofitable. A typical income statement for one such flight (Flight 482) follows: The following additional Information Is avallable about Flight 482 : a. Members of the flight crew are pald fixed annual salarles, whereas the flight attendants are pald by the filght. b. One-third of the liability Insurance Is a speclal charge assessed against Flight 482 because, in the opinion of the insurance company, the destination is in a high-risk area. The remaining two-thirds would be unaffected by a decision to drop Filght 482 . c. The baggage loading and flight preparation expense Is an allocatlon of ground crew's salarles and depreclation of ground equipment. Dropping Flight 482 would have no effect on the company's total baggage loading and flight preparatlon expenses. c. The baggage loading and flight preparation expense is an allocatlon of ground crew's salarles nd 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 Alrines has no authorization at present to replace it with another flight. e. Depreciation of alrcraft is due entirely to obsolescence. Depreciation due to wear and tear is negligible. f. Dropping Fight 482 would not allow Pegasus Alrlines to reduce the number of alrcraft in its fleet or the number of flight crew on its payroll. Required: 1. Prepare an analysis showIng what Impact dropping Flight 482 would have on the alrline's profits. (Do not round lintermedlate calculations. Negatlve amounts should be Indlcated with a minus sign.)

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