Required: 1. Prepare an analysis showing what impact dropping flight 482 would have on the airline's profits. 2. The airline's scheduling officer has been criticized because only about 50% of the seats on Pegasus" flights are being filled compared to an industry average of 60%. The scheduling officer has explained that Pegasus' average seat occupancy could be improved considerably by eliminating about 10% of its flights, but that doing so would reduce profits. Explain how this could happen.
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- What costs are relevant when pricing a cargo ship cruise? Challenging economic conditions in several countries have pushed freight ship companies to look for additional sources of revenues in addition to the revenue generated by hauling freight across the ocean. In recent years, one additional source of revenue for these freight companies has been to take on cruise passengers in addition to regular cargo. Generally there are just 2 – 12 passengers on a cargo ship. Demand for cargo ship cruises is high; travelers need to book months in advance. Typically, passengers taking a cruise on a cargo (or container) ship will get an air-conditioned room with private bathroom for about $115 per day. Meals are included; passengers will share three meals a day with the crew. The rooms are cleaned once a week by the ship’s steward. Passengers have to wash their own clothes. Entertainment options include walking or running on deck, playing ping pong or darts, watching or listening to CDs/DVDs, and…Lamont purchased round-trip business-class airfare to Sweden which cost him almost $7,000. He priced the next level of seating and discovered it was only $800. The difference was significant but the reclining seats in business-class made it worth the extra money. What type of pricing is the airline using? A) product-form B) optional product C) captive product D) by-product E) seasonalThe management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $179,000 of the fixed manufacturing expenses and $155,200 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped? Net operating income (loss) would $ 745,000 $ 387,000 $ 253,400 $216,200 decline increase by if product B90D were dropped. Therefore, the product dropped
- Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.A manufacturer is considering eliminating a segment because it shows the following $6,300 loss. All $21,100 of its variable costs are avoidable, and $38,500 of its fixed costs are avoidable. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Complete this question by entering your answers in the tabs below. Required A $ 63,300 21,100 42,200 48,500 (6,300) Required B Compute the incomo5 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…
- Granfield Company is considering eliminating its backpack division, which reported a loss for the recent year of $46,500 as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) If the backpack division is dropped, all $484,000 of its variable costs are avoidable, and $216,200 of its fixed costs are avoidable. The impact on Granfield's income from eliminating this business segment would be: Multiple Choice $494,000 decrease $216,200 increase $277,800 decrease $ 978,000 484,000 494,000 540,500 $ (46,500) $494,000 increase44. JetSky Airways has three divisions, the Western Division, the Eastern Division, and the Northern Division. The manager of the Western Division had wanted to purchase replacement airplanes for the division. However, he decided against it because, although revenues would increase and the new planes would be less expensive to operate, the initial cost of the planes was quite large. The Western Division is most probably accounted for as a(n) * cost center. None of these. O revenue center. investment center. profit center.Carolina Enterprise operates three product segments: sinks, bathtubs, and toilet bowls. Below are the figures showing how each product segment performed in 2022. If Carolina drops any segment, it can avoid 40% of the fixed costs allocated to the dropped segment. In 2023, should the sink segment be dropped in order to improve Carolina's financial performance? Sales Variable costs Contribution margin Fixed costs Net operating income Sinks P450,000 (220,000) 230,000 (250,000) P(20,000) Bathtubs P520,000 (315,000) 205,000 (180,000) P25,000 Toilet Bowls P480,000 (280,000) 200,000 (140,000) P60,000 No, because dropping the sink segment will cause Carolina's total net operating income to decrease by P150,000. Yes, because dropping the sink segment will cause Carolina's total net operating income to increase by P150,000. Yes, because dropping the sink segment will cause Carolina's total net operating income to increase by P130,000. No, because dropping the sink segment will cause Carolina's…
- Delmarva Oyster Company has been able to decrease its variable expenses per pound of oysters harvested. How will this affect the firm’s break-even sales volume?be discontinued. The special equipment used to produce the trampolines has A common fixed cost that is allocated on the basis of sales pesos. supervisors assigned to the model would be discharged.. Management is concerned about the continued losses shown by the round trampolines and wants a recommendation as to whether or not the line should no resale value. If the round trampoline model is dropped, the two line Problem 2, page 313-Crystal Sports Equipment (Eliminate or Retain Product Line) Requirement: Compute the increase/decrease in net operating income if the production and sale of the round trampolines is continued. Problem 2 (Eliminate or Retain a Product Line) Crystal Sports Equipment manufactures round, rectangular, and octagonal trampolines. Data on sales and expenses for the past month follow: Round P140,000 60,000 80,000 Trampoline Rectangular Octagonal P500,000 200,000 300,000 Total Sales Less variable expenses. Contribution margin.. Less fixed expenses: P360,000 P1,000,000…Break into teams and identify costs that an airline such as Delta Air Lines would incur on a flight from Green Bay to Minneapolis. (1) Identify the individual costs as variable or fixed. (2) Assume that Delta is trying to decide whether to drop this flight because it seems to be unprofitable. Determine which costs are likely to be saved if the flight is dropped.