Waterway Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Waterways base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent months activity in the form of a cost-volume-profit income statement.

Fare revenues (400 passenger flights)				$48,000
Variable costs
Fuel		$16,810
Snacks and drinks		730
Landing fees		2,000
Supplies and forms		1,100		20,640
Contribution margin				27,360
Fixed costs
Depreciation		3,000
Salaries		12,000
Advertising		500
Airport hanger fees		1,600		17,100
Net income				$10,260

Calculate the break-even point in number of passenger flights.

Break-even point

flights

(b)

Without calculations, determine the contribution margin at the break-even point.

Break-even point

$

(c) If ticket prices were decreased by 10%, passenger flights would increase by 25%. However, total variable costs would increase by the same percentage as passenger flights. (1) How much would net income be impacted by this change? Net income to $ (2) Should the ticket price decrease be adopted? Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor