If fares were decreased by 10 an additional 100 fares could

Reference no: EM13588058

Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic analysis of its operations. Both planes seat 10 passengers each, and they fly commuters from Comfi's base airport to the major city in the state, Metropolis. Each month 40 round-trip flights are made. Shown below is a recent month's activity in the form of a cost-volume-profit income statement.

Fare revenues (400 fares)		$46,500
Variable costs
Fuel	$16,315
Snacks and drinks	770
Landing fees	1,800
Supplies and forms	1,110	19,995
Contribution margin		26,505
Fixed costs
Depreciation	2,940
Salaries	14,196
Advertising	420
Airport hanger fees	1,710	19,266
Net income		$7,239

(a) Calculate the break-even point in (1) dollars and (2) number of fares. (Round answers to 0 decimal place, e.g. 1,225.)

1.		Break-even point		$
2.		Break-even point			fares

(b) Without calculations, determine the contribution margin at the break-even point.

Break-even point

(c) If fares were decreased by 10%, an additional 100 fares could be generated. However, total variable costs would increase by 20%. (Round answers to 0 decimal place, e.g. 1,225.)

(1) How much would net income be impacted by this change?

Net income

decreases / increases to $

(2) Should the fare decrease be adopted? No / Yes

Reference no: EM13588058

Questions Cloud

Equipment acquired on january 3 2005 at a cost of 147500 : equipment acquired on january 3 2005 at a cost of 147500 has an estimated useful life of eight years and an estimated

John carries one heavy box and kicks the other box so that : john carries one heavy box and kicks the other box so that it slides for a little bit and then stops and he continues

A storage tank acquired at the beginning of the fiscal year : a storage tank acquired at the beginning of the fiscal year at a cost of 86000 has an estimated residual value of 10000

Calculate material cost variance mcv material price : calculate material cost variance mcv material price variance mpv material usage variance and muv through the given

If fares were decreased by 10 an additional 100 fares could : comfi airways inc. a small two-plane passenger airline has asked for your assistance in some basic analysis of its

Journalize the entries to recored the followingcheck no : journalize the entries to recored the followingcheck no. 6172 is issues to establish a petty cash fund of 1000.the

What is the net work done on the block while it is moving : what is the net work done on the block while it is moving from point a to point b? explain how you arrived at your

Define the stages of the consumer behavior model or : research and discuss maslows theory of needs and how it is applied to marketing.define the stages of the consumer

Calculate material yield variance if product m having : calculate material yield variance if product m having standard mix of 500 kg 10 whose standard cost is 2400 and

User Account

All Pages