Go to the website for Delta Air Lines, www.delta.com, Under Planning Tools, click on Deals and Offers,
Question:
1. Find a fare departing from a city closest to you with a destination farthest from you. What is the amount of this roundtrip fare for the upcoming week-end?
2. Now find the best fare for the same itinerary departing two weeks from now, with a Saturday night stay. How much is the difference between the two fares?
3. Do you think that Delta is generating any positive contribution margin on the weekend Web fare, or is it merely creating good customer relations?
4. Are most of Delta's costs variable or fixed in relation to an individual passenger? Give some examples of each.
5. If the cost object were a specific flight rather than an individual passenger, what would be some examples of variable costs?
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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1 For the week of 10811 the author found a weekend Internet roundtrip fare of 199 plus taxes and fee...View the full answer
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