HI, I only need to figure out part C, Thanks! Exercise 19-4 (Part Level Submissi
ID: 2426587 • Letter: H
Question
HI, I only need to figure out part C, Thanks!
Exercise 19-4 (Part Level Submission)
(a)
SHOW SOLUTION
SHOW ANSWER
LINK TO TEXT
(b)
SHOW SOLUTION
SHOW ANSWER
LINK TO TEXT
(c)
HI, I only need to figure out part C, Thanks!
Exercise 19-4 (Part Level Submission)
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) $49,800 Variable costs Fuel $18,282 Snacks and drinks 790 Landing fees 1,810 Supplies and forms 1,030 21,912 Contribution margin 27,888 Fixed costs Depreciation 3,060 Salaries 12,570 Advertising 440 Airport hanger fees 1,570 17,640 Net income $10,248
Explanation / Answer
a) Contribution margin = 27888/49800 = 56%
Breakevne point in dollars = 17640/56% = 31500
Contribution margin per gare = 27888/400 = 69.72
Break even point in fare = 17640/69.72 = 253
b. Contribution at breakeven level = 253 x 69.72
= 17640
c.(1) Revised fare = 124.50 x 90% = 112.05
Variable cost = 54.78 x 120%
= 65.736
Revised contribution = 500 x (112.05 - 66.736)
= 22657
Net income = 35607 - 17640 =5017
(2) No, fare decrease should not be accepted.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.