Assume that a Hong Kong tourist agency approached the president of the airline about flying chartered tourist flights from Manila to Hong Kong. The tourist agency has offered the airline P180,000 per round-trip flight on a jumbo jet. Given the airline's usual occupancy rate and airfares, a round-trip jumbo jet generates revenue of P270,000. Sales Revenues: Passenger Cargo P270,000 40,000 P310,000 Variable Costs 120,000 Fixed Costs 100,000 220,000 90,000 Net Income If the offer is accepted, the company will not incur reservations and ticketing costs estimated to be P10,000. There is also excess capacity to cater to the additional flights of the special offer. 3. Determine the relevant/differential costs. 4. Should the offer be accepted?
Assume that a Hong Kong tourist agency approached the president of the airline about flying chartered tourist flights from Manila to Hong Kong. The tourist agency has offered the airline P180,000 per round-trip flight on a jumbo jet. Given the airline's usual occupancy rate and airfares, a round-trip jumbo jet generates revenue of P270,000. Sales Revenues: Passenger Cargo P270,000 40,000 P310,000 Variable Costs 120,000 Fixed Costs 100,000 220,000 90,000 Net Income If the offer is accepted, the company will not incur reservations and ticketing costs estimated to be P10,000. There is also excess capacity to cater to the additional flights of the special offer. 3. Determine the relevant/differential costs. 4. Should the offer be accepted?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Assume that a Hong Kong tourist agency approached the president of the airline about flying chartered tourist
flights from Manila to Hong Kong. The tourist agency has offered the airline P180,000 per round-trip flight on
a jumbo jet. Given the airline's usual occupancy rate and airfares, a round-trip jumbo jet generates revenue
of P270,000.
Sales Revenues:
P270,000
Passenger
Cargo
40,000
P310,000
Variable Costs
120,000
100,000
Fixed Costs
220,000
Net Income
90,000
If the offer is accepted, the company will not incur reservations and ticketing costs estimated to be P10,000.
There is also excess capacity to cater to the additional flights of the special offer.
3. Determine the relevant/differential costs.
4. Should the offer be accepted?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdad38a55-8361-4c90-8971-1ec7c9a2a575%2F9749c7e3-b346-426c-86f2-9e6c58bf4f96%2F4flys9_processed.png&w=3840&q=75)
Transcribed Image Text:Assume that a Hong Kong tourist agency approached the president of the airline about flying chartered tourist
flights from Manila to Hong Kong. The tourist agency has offered the airline P180,000 per round-trip flight on
a jumbo jet. Given the airline's usual occupancy rate and airfares, a round-trip jumbo jet generates revenue
of P270,000.
Sales Revenues:
P270,000
Passenger
Cargo
40,000
P310,000
Variable Costs
120,000
100,000
Fixed Costs
220,000
Net Income
90,000
If the offer is accepted, the company will not incur reservations and ticketing costs estimated to be P10,000.
There is also excess capacity to cater to the additional flights of the special offer.
3. Determine the relevant/differential costs.
4. Should the offer be accepted?
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