Profits have been decreasing for several yoars at Pegasus Airlines in an effort to improve the company's performance, consideration is being given to dropping several fights that appear to be unprofitable. A typical income statement for one such flight (flight 482 ) follows: The following additional information is available about Fight 482 : a. Members of the flight crew are paid fixed annual salaries, whereas the flight attendants are paid by the flight. b. One-third of the liablity insurance is a special 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 Flight 482. c. The baggege loading and flight preparation expense is an allocation of ground crow's salaries and dopreciation of ground equipment. Dropping Flight 482 would have no effect on the company's total baggoge loading and flight preparation expenses d. If Fight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another flight. e. Depreciation of aircraft is due entirely to obsolescence. Depreciation due to wear and tear is negligbile. f. Dropping Flight 482 would not allow Pegasus Arlines to reduce the number of aircraf in its fieet or the number of fight crew on is purall Required: 1. Prepore an analysis showing what impact dropping Flight 482 would have on the airline's profits. (Do not round intermediate calculations. Negative amounts should be indicated with a minus sign.) The following additionol information is available about Flight 482 a. Members of the flight crew are paid fixed annual salaries, whereas the fight attendants are paid by the fight. b. One-third of the liability insurance is a special charge assessed against Flight 482 because, in the opinion of the insurance company, the destinabion 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 crew's salaries and depreciation of ground equipment. Oropping Flight 482 would have no effect on the company's total bagpoge loading and flight preparation expenses. d. If Flight 482 is dropped, Pegasus Aitlines has no authorization at present to replace it with anothor fight. e. Depreciation of aircraft is due entirely to obsolescence. Depreciation due to wear and tear is negligible. tDropping 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. Prepare an analysis showing what impact dropping Flight 482 would have on the airline's profits, (Do not round intermediate calculations, Negative amounts should be indicated with a minus sign.) 2. This part of the question is not part of your Connect assignment
