Week 4 - individual assignments - David Trejo

Week 4 - individual assignments - David Trejo - E5-9...

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E5-9 Regional 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 Regional’s base airport to the major city in the state, Metropolis. Each month 40 round-trip flights are made. Shown on page 219 is a recent month’s activity in the form of a cost-volume-profit income statement. Fare revenues (300 fares) $45,000 *** Per fare Variable costs Fuel $14,000 *** Contribu Snacks and drinks 800 ****Cont Landing fees 2,000 ***** C Supplies and forms 1,200 18,000 Contribution margin 27,000 Fixed costs Depreciation 3,000 Salaries 15,000 Advertising 500 Airport hanger fees 1,750 20,250 Net income $6,750 (a) Calculate the break-even point in (1) dollars and (2) number of fares. *** Fixed cost divided by Contribution margin ratio = Break-even point in dollars *** 1) 20250 / 60% = 33,750 *** Fixed cost divided by contribution margin per fare = Break even point in units *** 2) 20250 / 90 = 225
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Week 4 - individual assignments - David Trejo - E5-9...

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