Pac Coast Airlines has been incurring losses for the past few years. In an attempt to improve the overallfinancial performance of the company, the general manager is considering discontinuing several of theflights. Flight 102 from Atlanta, Georgia to Paris, France is one such flight. The contribution marginstatement for this particular flight is shown below.Pac Coast AirlinesContribution Margin StatementFor the Year Ended December 31, 2019Flight 102 Revenue $2,000,000Less: Variable Costs 1,500,000Contribution Margin 500,000Less: Fixed

Pac Coast Airlines has been incurring losses for the past few years. In an attempt to improve the overallfinancial performance of the company, the general manager is considering discontinuing several of theflights. Flight 102 from Atlanta, Georgia to Paris, France is one such flight. The contribution marginstatement for this particular flight is shown below.Pac Coast AirlinesContribution Margin StatementFor the Year Ended December 31, 2019Flight 102 Revenue $2,000,000Less: Variable Costs 1,500,000Contribution Margin 500,000Less: Fixed

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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Decision to Discontinue a Product On the basis of the following data, the general manager of Foremost Footwear Inc. decided to discontinue Children’s Shoes because it reduced income from operations by $10,000. What is the flaw in this decision if it is assumed that fixed costs would not be materially affected by the discontinuance? Foremost Footwear Inc. Product-Line Income Statement For The Year Ended April 30, 20Y7 Children's Shoes Men's Shoes Women's Shoes Total Sales $165,000 $300,000 $500,000 $965,000 Costs of goods sold: _______________ ___________ __________ ____________ Variable cost $105,000 $150,000 $220,000 $475,000 Fixed costs 32,000 60,000 120,000 212,000 Total cost of goods sold $137,000 $210,000 $340,000 $687,000 Gross profit $28,000 $90,000 $160,000 $278,000 Selling and adminstrative expenses: ____________ ____________ ____________ ___________ Variable selling and admin. expenses $21,000 $45,000 $95,000 $161,000 Fixed selling and admin.…
Differntial analysis for machine replacement proposal Lexigraphic Printing Company is considering replacing a machine that has been used in its factory for four years.Relevant data associated with the operations of the old machine and the new machine.neither of which has any estimated residual value,are as follows: Annual nonmanfacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Instructions 1. Prepare a differential analysis as of april 30 comparing operations using the present machine (alternative 1 ) with operations using the new machine (alternative 2 ).The analysis should indicate the total differntial income that would result over the six-years period if the new machine is acquired. 2 List other factors that should be considered before a final decision is reached.
After reviewing financial reports of her company's daycare service, Camila determines it should be closed due to a loss. Revenues $120195 Variable costs $47953 Traceable (avoidable) fixed costs $70095 Allocated corporate overhead $45995 What would be the impact to net income of closing the daycare? State loss as negative, gain as positive. Round only your final answer to the nearest dollar.
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Replace Equipment A machine with a book value of $251,700 has an estimated six-year life. A proposal is offered to sell the old machine for $214,200 and replace it with a new machine at a cost of $281,500. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $50,400 to $40,300. a. Prepare a differential analysis dated April 11 on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) April 11 Continue Replace Differential with Old Old Effects Machine Machine (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine $ Costs: Purchase price Direct labor (6 years) Profit (Loss) b. Should the company continue with the old machine (Alternative 1) or replace the old machine…
5 In an effort to increase profits, Pegasus Airlines is thinking about dropping several flights that appear to be unprofitable. A typical income statement for one round-trip of one such flight (flight 482) is as follows: Ticket revenue (175 seats x 40% occupancy × $200 ticket price). Variable expenses ($15 per person) Contribution margin Flight expenses: Salaries, flight crew Flight promotion Depreciation of aircraft Fuel for aircraft Liability insurance Salaries, flight assistants Baggage loading and flight preparation Overnight costs for flight crew and assistants at destination Total flight expenses Net operating loss $ 14,000 1,050 12,950 $ 1,800 750 1,550 5,800 4,200 1,500 1,700 300 17,600 $ (4,650) 100.0% 7.5 92.5% The following additional information is available about flight 482: a. Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are paid based on the number of round trips they complete. b. One-third of the liability insurance is a…
Required information PR 2-46 (Algo) Overtime Premiums and Fringe Benefit Costs; Airline (LO 2-1, 2-3, 2-5, 2-9, 2-10) [The following information applies to the questions displayed below.] Heartland Airways operates commuter flights in three states. Due to a political convention held in Topeka, the airline added several extra flights during a two-week period. Additional cabin crews were hired on a temporary basis. However, rather than hiring additional flight attendants, the airline used its current attendants on overtime. Ushanti Gaines worked the following schedule on August 10. All of Gaines's flights on that day were extra flights that the airline would not normally fly. Regular time: 2 round-trip flights between Topeka and St. Louis (8 Overtime: 1 one-way flight from Topeka to Kansas City (4 hours) Gaines earns $12 per hour and is paid time and a half when working overtime. Fringe benefits cost the airline $4 per hour for any hour worked, regardless of whether it is a regular or…
Subject-Acounting
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1. What is the financial advantage (disadvantage) per quarter of discontinuing the racing bikes? 2.Should the production and sales of racing bikes be discontinued?
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