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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 increases V to $ (2) Should the ticket price decrease be adopted? eTextbook and Media 1830 Yes ✓

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 increases V to $ (2) Should the ticket price decrease be adopted? eTextbook and Media 1830 Yes ✓

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Wildhorse 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 Wildhorse's base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. The following is a recent month's activity in the form of a cost-volume-profit income statement. Fare revenues (400 passenger flights) Variable costs Fuel Snacks and drinks Landing fees Supplies and forms Contribution margin Fixed costs Depreciation Salaries Advertising Airport hanger fees Net income $17,080 976 2,440 1,464 3,660 18,300 610 2,135 $58,560 21,960 36,600 24,705 $11,895
Transcribed Image Text:Wildhorse 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 Wildhorse's base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. The following is a recent month's activity in the form of a cost-volume-profit income statement. Fare revenues (400 passenger flights) Variable costs Fuel Snacks and drinks Landing fees Supplies and forms Contribution margin Fixed costs Depreciation Salaries Advertising Airport hanger fees Net income $17,080 976 2,440 1,464 3,660 18,300 610 2,135 $58,560 21,960 36,600 24,705 $11,895
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 increases V to $ (2) Should the ticket price decrease be adopted? eTextbook and Media 1830 Yes ✓
Transcribed Image Text: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 increases V to $ (2) Should the ticket price decrease be adopted? eTextbook and Media 1830 Yes ✓
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