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 incomestatement.Fare revenues (400 passenger flights)Variable costsFuelSnacks and drinksLanding feesSupplies and formsContribution marginFixed costsDepreciationSalariesAdvertisingAirport hanger feesNet income$17,0809762,4401,4643,66018,3006102,135$58,56021,96036,60024,705$11,895 If ticket prices were decreased by 10%, passenger flights would increase by 25%. However, total variable costs would increase bythe same percentage as passenger flights.(1) How much would net income be impacted by this change?Net incomeincreases V to $(2) Should the ticket price decrease be adopted?eTextbook and Media1830Yes ✓

Income statement is one of the financial statements that shows profitability, total revenue and…

Answered: If ticket prices were decreased by 10%,…

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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Illustration 1 Sales - Cybernetic Berhad Statement of profit and loss and comprehensive income Ended 2020 Good 240000 Variable cost 144000 Contribution 96000 margin Fixed cost EBIT Analysis Impact of Leverage 80000 16000 current 288000 172000 115200 80000 35200 Compute Degree of operating leverage and explain the answer. weak 320000 200000 120000 80000 40000
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3) If demand for 2022 is instead 2,500 units should the company pay to increase their capacity? Why? Please explain your calculations and reference to the chart in Figure 1. Assume units are sold at the normal price. Please mention the concept of incremental profits. Hint: If you expand capacity, you will have to pay additional fixed costs of $25,000. Remember that fixed costs are fixed within the relevant range. If you expand capacity then you are outside this range. If you expand capacity then you can make revenue on 500 additional units at the normal price and would pay variable costs on 500 additional units. Please consider the incremental profit or loss of expanding capacity. The incremental profit is the increase in revenues minus the increase in costs of adding 500 more units. If the incremental profit of expanding capacity is positive then you should do so.
sde • The most likely strategy to reduce the break-even point should be to 1. Increase fixed costs 2. Decrease selling price 3. Increase variable costs 4. Increase selling price O 1 O 2 O 3 O 4 Question 20 • In break-even analysis, which of the following is not an assumption over the relevant range 1. Unit selling price are constant 2. Unit variable costs are constant 3. Total costs are constant 4. Total fixed costs are constant O 1 O 2 O 3 04 MacBook Pro
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A segment has the following data: Sales $790000 Variable expenses 345000 Fixed expenses 550000 What will be the incremental effect on net income if this segment is eliminated, assuming the fixed expenses will be allocated to profitable segments? $345000 increase $445000 decrease Cannot be determined from the data provided $5750 decrease
Q1) One of the industrial investors needed an analysis that would lead him to a break-even level between the following inputs and outputs: Fixed Cost = 180079 $ , Variable Costs =475, Revenue of saling prices per unit (204 $ ) Y of Products 890 ‘599‘ 917‘ eu‘ 955[ 975‘ sas[ 1,u7‘ 1,159' 1,193‘ 1,209‘ 1,255‘ Require A) Find all lines of anlysis . B) How the produaction reach to B.E.P. C) Based on the available information, show the level of variation from line of production to other annually.
Calculate the information below A) PV ratio B)profit when sales are 20000 C)New BE point if selling price is reduced 25% Fixed cost 8750 Break even sales 16000
What is AAA Corp.’s projected degree of operating leverage based on the projected sales?

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