Determine the relevant costs

Reference no: EM1360711

What are the relevant costs for American Airlines (AA) to fly a customer on a round-trip flight from Dallas to San Francisco on Friday, May 31, 2002, and returning on Monday, June 3, 2002? The incremental costs (i.e. variable costs) are very small, mainly food costs of $20, because other costs are fixed - the plane, pilots, ticket agents, and baggage handlers. The question is: What are the opportunity costs? To determine the opportunity costs, AA must assess what profit it has forgone by selling a seat to a particular customer. The profit forgone depends on whether the flight is full - meaning the aircraft is operating at capacity. AA would normally charge $400 for this round-trip ticket. If seats are available, the opportunity cost is ______. If the flight is full, the opportunity cost is _______.

Reference no: EM1360711

Questions Cloud

How fast does bullet move after the bullet emerges : how fast does it move after the bullet emerges. The critical angle of refraction for calcite is 68.4^0 when it forms a boundary with water. use this information to find the speed of light in calcite.

Explain the unique selling proposition : Explain the unique selling proposition and budget and the target audience and the message and what media the industry focuses on

Compliance-based approach : elements are necessary: role models, corporate credos and codes of conduct, reward and evaluation systems, and policies and procedures

How motivation and emotion are related to change : Provide an explanation of how motivation and emotion are related to change. Then explain how knowledge of this relationship might benefit you as a professional working within an educational setting.

Determine the relevant costs : Determine the relevant costs for American Airlines to fly a customer on a round-trip flight from Dallas to San Francisco on Friday, May 31, 2002, and returning on Monday, June 3, 2002?

Elucidate amount of income that ms ramirez has : Suppose that the price didn't change. Elucidate amount of income that Ms Ramirez has to give up to have the same level of utility as if the price had changed.

Determine the cost-benefit ratio : Determine the cost-benefit ratio and calculate the ROI - Supervisory Training - Cost-Benefit Ratio and ROI

What information-gathering methods are most appropriate : what information-gathering methods are most appropriate to learn about requirements from reliable's own management staff and other employees? from client health-care organizations? from suppliers?

What is the net force exerted on the skier : What is the net force exerted on the skier, assuming his acceleration is constant.

User Account

All Pages