Computation of break-even-point of airline companythe

Assignment Help Financial Accounting

Reference no: EM13356710

Computation of Break-even-point of Airline Company.

The Smooth Flight Airline Company is considering lowering fares in an attempt to fill unused seats on its regular flights from New York to Chicago. Current capacity on each flight is 250 passengers. At present, the company sells an average of 130 tickets at $330 per ticket, but estimates that an additional 100 tickets could be sold if it offered a stand-by ticket price of $140 on the day of the flight. Fixed costs per flight are $50,000 and variable costs per ticket are $25.

1. Prepare a direct costing (variable) income statement to show the current profit or loss for each flight at the current level of 130 tickets sold per flight.

2. Prepare a direct costing (Variable) income statement to show the change in profits if the proposed stand-by plan is put into effect.

3. How many tickets must be sold at the $330 price to cover fixed costs?

4. How many tickets must be sold at the $140 price to cover fixed costs, assuming all tickets are at that price?

5. Would you recommend that management adopt the stand-by ticket? WHY OR WHY NOT?

Reference no: EM13356710

Questions Cloud

Multiple choice questions on cvp analysis1 sharp company : multiple choice questions on cvp analysis.1. sharp company retailer plans to sell 15000 units of product x during the

Computing the indifference level of ebit between these two : computing the indifference level of ebit between these two alternatives.moon and chittenden are considering a new

Calculate the ebit-eps indifference pointmorton industries : calculate the ebit-eps indifference point.morton industries is considering opening a new subsidiary in boston to be

Calculate the ebit-eps indifference pointemco products has : calculate the ebit-eps indifference point.emco products has a present capital structure consisting only of common stock

Computation of break-even-point of airline companythe : computation of break-even-point of airline company.the smooth flight airline company is considering lowering fares in

Computation of contribution margin ratio bep and margin of : computation of contribution margin ratio bep and margin of safety.aunt pittys pies is a small bakery that sells its

Computation of break-even-point and contribution margin : computation of break-even-point and contribution margin ratio.breakeven point cost structure and target salesplainfield

Decision on closure of one of the units with the help of : decision on closure of one of the units with the help of decrease in net income.the most recent monthly income

Computation of contribution per unit for various : computation of contribution per unit for various models.person company makes two types of backpacks. data for the

User Account

All Pages