MidCoast Airlines provides charter airplane services. In October, when the company is operating at 60% of its capacity, it receives abid from the local college. The college is organizing a trip for a student group. The college budgeted only $64,000 for round-tripairfare. MidCoast Airlines normally charges between $84,000 and $94,000 for such service. MidCoast determines its total cost for theround-trip flight to Washington to be $82,400, which consists of the following.Variable costFixed costTotal cost$ 45,40037,000$ 82,400Although the manager at MidCoast supports the college's educational efforts, she is struggling to justify accepting only $64,000.(a) What is the contribution margin from accepting the offer?(b) Should the airline accept the $64,000 offer from the college?Complete this question by entering your answers in the tabs below.Required ARequired BWhat is the contribution margin from accepting the offer?Revenue from tripVariable costs of tripContribution margin< Required ARequired B> MidCoast Airlines provides charter airplane services. In October, when the company is operating at 60% of its capacity, it receives abid from the local college. The college is organizing a trip for a student group. The college budgeted only $64,000 for round-tripairfare. MidCoast Airlines normally charges between $84,000 and $94,000 for such service. MidCoast determines its total cost for theround-trip flight to Washington to be $82,400, which consists of the following.Variable costFixed costTotal cost$ 45,40037,000$ 82,400Although the manager at MidCoast supports the college's educational efforts, she is struggling to justify accepting only $64,000.(a) What is the contribution margin from accepting the offer?(b) Should the airline accept the $64,000 offer from the college?Complete this question by entering your answers in the tabs below.Required ARequired BShould the airline accept the $64,000 offer from the college?Should the airline accept the $64,000 offer from the college?< Required ARequired B

Introduction: The contribution margin is the difference between a product's price and any associated…

MidCoast Airlines provides charter airplane services. In October, when the company is operating at 60% of its capacity, it receives a bid from the local college. The college is organizing a trip for a student group. The college budgeted only $64,000 for round-trip airfare. MidCoast Airlines normally charges between $84,000 and $94,000 for such service. MidCoast determines its total cost for the round-trip flight to Washington to be $82,400, which consists of the following. Variable cost Fixed cost Total cost $ 45,400 37,000 $ 82,400 Although the manager at MidCoast supports the college's educational efforts, she is struggling to justify accepting only $64,000. (a) What is the contribution margin from accepting the offer? (b) Should the airline accept the $64,000 offer from the college? Complete this question by entering your answers in the tabs below. Required A Required B What is the contribution margin from accepting the offer? Revenue from trip Variable costs of trip Contribution margin

MidCoast Airlines provides charter airplane services. In October, when the company is operating at 60% of its capacity, it receives a bid from the local college. The college is organizing a trip for a student group. The college budgeted only $64,000 for round-trip airfare. MidCoast Airlines normally charges between $84,000 and $94,000 for such service. MidCoast determines its total cost for the round-trip flight to Washington to be $82,400, which consists of the following. Variable cost Fixed cost Total cost $ 45,400 37,000 $ 82,400 Although the manager at MidCoast supports the college's educational efforts, she is struggling to justify accepting only $64,000. (a) What is the contribution margin from accepting the offer? (b) Should the airline accept the $64,000 offer from the college? Complete this question by entering your answers in the tabs below. Required A Required B What is the contribution margin from accepting the offer? Revenue from trip Variable costs of trip Contribution margin

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $54,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $18,000 or will be entitled to an additional $18,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $18,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $18,000. Required: 1. Prepare the journal entry to record revenue at the end of each month for the first…
Sunland, Inc. is a distributor of prepaid telephone cards to customers in its convenience stores. When Sunland sells the cards, it then pays the telecommunications company, TeleExpress, less a commission of 20 percent of the selling price to customers. Sunland receives $4,200 in cards in January 2020. Sunland sold 45% of the cards in February, 30% in March, and 25% in April. It costs TeleExpress $3,000 to provide the telephone service on the cards sold by Sunland.Indicate how much income Sunland should recognize in January, February, March, and April.
Flow Cruiseline offers nightly dinner cruises departing from several cities on the East Coast of the United States including Charleston, Baltimore, and Alexandria. Dinner cruise tickets sell for $60 per passenger. Flow Cruiseline's variable cost of providing the dinner is $30 per passenger, and the fixed cost of operating the vessels (depreciation, salaries, docking fees, and other expenses) is $270,000 per month. The company's relevant range extends to 15,000 monthly passengers. The breakeven sales are 9,000 tickets sold. a. Compute the operating leverage factor when Flow Cruiseline sells 10,000 dinner cruises. b. If volume increases by 8%, by what percentage will operating income increase? c. If volume decreases by 6%, by what percentage will operating income decrease? a. Compute the operating leverage factor when Luxury Cruiseline sells 10,000 dinner cruises. (Round your answer to one decimal place.) First, identify the formula, then compute the operating leverage factor.…
Franklin Camps, Incorporated leases the land on which it builds camp sites. Franklin is considering opening a new site on land that requires $2,450 of rental payment per month. The variable cost of providing service is expected to be $6 per camper. The following chart shows the number of campers Franklin expects for the first year of operation of the new site: January February March 150 260 210 February August April 210 Price May 330 June 510 Required Assuming that Franklin wants to earn $7 per camper, determine the price it should charge for a camp site in February and August. Note: Do not round intermediate calculations. July August September October November December Total 660 660 360 390 150 310 4,200
Leo Consulting enters into a contract with Highgate University to restructure Highgate’s processes for purchasing goods from suppliers. The contract states that Leo will earn a fixed fee of $66,000 and earn an additional $13,000 if Highgate achieves $130,000 of cost savings. Leo estimates a 70% chance that Highgate will achieve $130,000 of cost savings. Assuming that Leo determines the transaction price as the expected value of expected consideration, what transaction price will Leo estimate for this contract? Transaction price for the contract ?
Midwest Airlines flies a short nonstop with 148-passenger planes. Considering all the costs of owning each plane plus the salaries for their crews and the fuel costs and landing fees, the fixed cost for a single flight is $16,500. If the costs associated with each passenger (reservations cost, check-in cost, baggage handling cost, snack cost, etc.) total $75 per passenger and the average ticket price is $214 (before the various taxes are added), what percentage of seats must be filled for the flight to break even?
Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $10,660. The booth will be open 26 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $190 per package. She will continue to sell the existing product, EZRecords, which costs $103 per package. Ms. Ortega believes that the salesperson will spend approximately 16 hours selling EZRecords and 10 hours marketing ProOffice. Required a. Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 73 units of EZRecords and 59 units of ProOffice.
Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $115,370. The seller agreed to allow a 6.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Transportation cost amounted to $2,080. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $1,150. The loader operator is paid an annual salary of $11,910. The cost of the company's theft insurance policy increased by $2,090 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $9,900. Required: Determine the amount to be capitalized in an asset account for the purchase of the front-end loader. Note: Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign. Costs that are to be capitalized: List price Total costs
Next week, Super Discount Airlines has a flight from New York to Los Angeles that will be booked to capacity. The airline knows from past history that an average of 25 customers (with a standard deviation of 15) cancel their reservation or do not show for the flight. Revenue from a ticket on the flight is $125. If the flight is overbooked, the airline has a policy of getting the customer on the next available flight and giving the person a free round-trip ticket on a future flight. The cost of this free round-tripticket averages $250. Super Discount considers the cost of flying the plane from New York to Los Angeles at a sunk cost. By how many seats should Super Discount overbook the flight?
Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $13.00 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the commission paid to the airport operator, and so on, is $11.40. The annual fixed cost for GGN is $15,120. Required: How many cases must Golden Gate Novelties sell every year to break even? Note: Do not round intermediate calculations. The owner of GGN believes that the company can sell 12,600 chains a year. What is the margin of safety in terms of the number of chains?
Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $117,890. The seller agreed to allow a 5.00 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Transportation cost amounted to $2,680. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $770. The loader operator is paid an annual salary of $28,360. The cost of the company's theft insurance policy increased by $1,940 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $6,100. Required: Determine the amount to be capitalized in an asset account for the purchase of the front-end loader. Note: Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign. Costs that are to be capitalized: List price Total costs $ 0
Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $118,810. The selleragreed to allow a 6.00 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight costamounted to $2,840. Southwest Milling had to hire a specialist to calibrate the loader. The specialist’s fee was $800. The loader operatoris paid an annual salary of $29,210. The cost of the company’s theft insurance policy increased by $2,180 per year as a result ofacquiring the loader. The loader had a four-year useful life and an expected salvage value of $13,500.Requireda. Determine the amount to be capitalized in an asset account for the purchase of the loader.b. Record the purchase in general journal format. Required A Required B Complete this question by entering your answers in the tabs below.