Question Sapphire Airlines offers its passenger the opportunity to join Sapphire Express Club that entitles a traveller to use the club facilities at any Malaysian airports Club privileges include private lounge and restaurant, discounts on meals and beverages and use of small health spa As with other airlines around the globe, Sapphire has been facing a decline in profit attributable to the Covid19 pandemic movement restriction The Club in particular, has shown consistent loss The recent statement are as follows Sales revenue RM150,000 Variable expenses Food and beverages Personnel Variable overhead (70,000) (40,000) (25,000) Contribution margin 15,000 Fixed expenses Club building Depreciation Supervisory salary Airport fees General overhead (allocated) (30,000) (25,000) (15,000) (10,000) Profit (loss) (65,000) All Clubs variable expenses can be avoided should the club be discontinued However, Sapphire will continue to own the club building The supervisory staffs will no longer be employed if the club closes and Sapphire will no longer pay the airport fee Required Decide whether Sapphire should discontinue the club operations Show your computation (11 marks)

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Question Sapphire Airlines offers its passenger the opportunity to join Sapphire Express Club that entitles a traveller to use the club facilities at any Malaysian

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Sapphire Airlines offers its passenger the opportunity to join Sapphire Express Club that entitles a traveller to use the club facilities at any Malaysian airports. Club privileges include private lounge and restaurant, discounts on meals and beverages and use of small health spa.

As with other airlines around the globe, Sapphire has been facing a decline in profit attributable to the Covid19 pandemic movement restriction. The Club in particular, has shown consistent loss.

The recent statement are as follows:

Sales revenue	RM150,000
Variable expenses: Food and beverages Personnel Variable overhead	(70,000) (40,000) (25,000)
Contribution margin	15,000
Fixed expenses: Club building Depreciation Supervisory salary Airport fees General overhead (allocated)	(30,000) (25,000) (15,000) (10,000)
Profit (loss)	(65,000)

All Clubs variable expenses can be avoided should the club be discontinued. However, Sapphire will continue to own the club building. The supervisory staffs will no longer be employed if the club closes and Sapphire will no longer pay the airport fee.

Required:

Decide whether Sapphire should discontinue the club operations. Show your computation.

(11 marks)