rofits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performarice, the company is hinking about dropping several flights that appeat to be unprofitable. A typical income statement for one round trip of one such flight (flight 482 ) is as follows: The following additional information is available about flight 482 : a. Members of the flight crew are paid flxed annual salarles. Whereas the llight assistants are pald based on the number of round trips they complete b. One third of the llability insurance is a special charge assessed against fight 482 because in the opinion of the insurance company. the destination of the fight is in a "highilisk" 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 crews' salaties and depreciation of ground equipment. Diopping fight 482 would have no effect on the company's total baggage loading and flight preparation expenses. The following additional information is avallable about flight 482 : a. Members of the fight crew are paid 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 speclal charge assessed against flight 482 because in the opinion of the insurance company, the destination of the flight 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 crews' salaries and depreciation of ground equipment. Dropping flight 482 would have no effect on the company's total baggage loading and fight preparation expenses: d. If flight 482 is dropped, Pegasus Airines has no authorization at present to replace it with another flight. e. Aircraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible. 1. Dropping flight 482 would not allow Pegasus Alilines to reduce the number of aircraft in its fleet or the number of flight crew on its payroli. Required: 1. What is the financial advantage (disadvantage) of dtscontinuing thioht 4902