Chapter 6, Problem 6.4E

(a)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

(1)

To Calculate: The break-even point in dollars.

(2)

To determine

Break-Even Point:

The break-even point is a point where total cost incurred are the same as the total revenue earned. At the break-even point the profit will be zero. The break-even point is the point in the business where there is no loss and no gain.

To Calculate: The break-even point in number of passenger flights.

(b)

To determine

Contribution Margin Ratio:

The contribution margin ratio shows the amount of difference in the actual sales value and the variable expenses in percentage. This margin indicates that percentage which is available for sale above the fixed costs and the profit.

To Determine: The contribution margin at the break-even point.

(c)

To determine

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To Determine: Whether the decrease in the ticket price should be adopted.