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Student Name: Class: Problem 13-18 PEGASUS AIRLINES Analysis of Discontinuing Flight Contribution margin lost if the flight is discontinued Flight...

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Student Name: Class: Problem 13-18 PEGASUS AIRLINES Analysis of Discontinuing Flight Contribution margin lost if the flight is discontinued Flight costs that can be avoided if the flight is discontinued: Net decrease in profits if the tour is discontinued PEGASUS AIRLINES Alternative Analysis of Discontinuing Tour Difference: Net Operating Keep Drop Income the the Increase or Flight Flight (Decrease) Ticket revenue $14,000 Variable expenses 1,050 Contribution margin $12,950 Less flight expenses: Salaries, flight crew $1,800 Flight promotion 750 Depreciation of aircraft 1,550 Fuel for aircraft 5,800 Liability insurance 4,200 Salaries, flight assistants 1,500 Baggage loading and flight preparation 1,700 Overnight costs for flight crew and assistants at destination 300 Total tour expenses 17,600 Net operating loss $(4,650)
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Given Data P13-18: PEGASUS AIRLINES Seat capacity 175 Occupancy 40% Ticket price $200 Ticket revenue $14,000 100.0% Variable expenses 1,050 7.5% Contribution margin $12,950 92.5% Flight expenses: Salaries, flight crew $1,800 Flight promotion 750 Depreciation of aircraft 1,550 Fuel for aircraft 5,800 Liability insurance 4,200 Salaries, flight assistants 1,500 Baggage loading and flight preparation 1,700 Overnight costs for flight crew and assistants at destination 300 Total tour expenses 17,600 Net operating loss $(4,650)
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