Comfi Airways, Inc., a small two-plane passenger airline, has asked for your assistance in some basic...

Transcribed Image Text:

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 passenger flights) $48,000 Variable costs Fuel $17,210 Snacks and drinks Landing fees 760 2,100 Supplies and forms 1,050 21,120 Q Contribution margin 26,880 Fixed costs Depreciation 2,900 Salaries 15,260 Advertising 400 Airport hanger fees 1,600 20,160 $6,720 Net income (c) If ticket prices were decreased by 10%, passenger flights would increase by 25%. However, total variable costs would increase by the same percentage as passenger flights. (1) How much would net income be impacted by this change? Net income to $ (2) Should the ticket price decrease be adopted? By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER 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 passenger flights) $48,000 Variable costs Fuel $17,210 Snacks and drinks Landing fees 760 2,100 Supplies and forms 1,050 21,120 Q Contribution margin 26,880 Fixed costs Depreciation 2,900 Salaries 15,260 Advertising 400 Airport hanger fees 1,600 20,160 $6,720 Net income (c) If ticket prices were decreased by 10%, passenger flights would increase by 25%. However, total variable costs would increase by the same percentage as passenger flights. (1) How much would net income be impacted by this change? Net income to $ (2) Should the ticket price decrease be adopted? By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER

Answer rating: 100% (QA)

Break even factor Fixed Cost Sales Variable Costs F... View the full answer