Assume you are the manager of ground operations for Hoepker Airlines at the Metro Airport. You have just been informed that the plane size between Phoenix and New York will be increased from a Boeing 737 to a 727 and is expected to generate 50 additional passengers per flight. What ground operations costs do you think will increase because of the additional 50 passengers per flight? What ground operations will not be affected? Which of these costs will be fixed costs and which are variable? How will the increase in the number of passengers affect the calculation of Hoepker's break–even point for a flight?

Answer rating: 100% (QA)

Variable costs are defined as costs that go up or down depending upon the usage of the airplane For example as the aircraft usage hours increase the variable cost will increase as well even though the ... View the full answer