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Prolits have been decreasing for scveral years at Pegasus Alilines, in an effort fo improve the company's performance, the compary is thinking about dropping several

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Prolits have been decreasing for scveral years at Pegasus Alilines, in an effort fo improve the company's performance, the compary is thinking about dropping several tights that appear to be unprotitable. A typical income statement for one round trip of one such flight (ilight 482 is is as follows The following additional information is avallable about night 482 a. Menbers of the filight cow are pald thacd annual salaries, whereas the fight astistants are paid based on the number of round tips they complete a. Members of the flight crew are pald 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 chatge assessed against flight 482 because in the opinlon of the insurance company. the destination of the flight is in a "high-iisk" atea. 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 diopped. Pegasus Airlines has no authorization at present to replace it with another tight. e. Alrcraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible. f. Dropping flight 482 would not allow Pegasus Alilines to reduce the number of alrcraft in its fleet or the number of flight crew on its payroll. Required: 1. What is the financial advantage (disadvantage) of discontinuing flight 482

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