Question
Suppose you work for a passenger airline and are reviewing an investment proposal. The proposal involves carrying cargo utilizing some of the existing routes. You
Suppose you work for a passenger airline and are reviewing an investment proposal. The proposal involves carrying cargo utilizing some of the existing routes. You have available space in planes that can be used for this purpose. As you review financial projections you notice that there is no expense line for pilot salaries. You question the analyst who prepared the projections and receive a suggestion that pilots would be paid regardless of the proposal and therefore their salaries are not incremental. Because they are not incremental to the proposal, they have been excluded in projections. How would you respond to the analysts?
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