K Analyze Global Air's cost-volume-profit relationships Global Air is considering a new flight between Atlanta and...

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K Analyze Global Air's cost-volume-profit relationships Global Air is considering a new flight between Atlanta and Los Angeles. The average fare per seat for the flight is $760. The costs associated with the flight are as follows: Fixed costs for the flight: Crew salaries Operating costs Aircraft depreciation Total Variable costs per passenger: $ 5,000 50,000 25,000 $80,000 Passenger check-in Operating costs Total $ 20 100 $120 The airline estimates that the flight will sell 175 seats. a. Determine the break-even number of passengers per flight. Break-Even Sales (units) passengers b. Based on your answer in (a), should the airline add this flight to its schedule? The airline should the flight. The number of passengers is the break-even number of passengers for the flight. c. How much profit should each flight produce? d. Based on the case and your answers what additional issues might the airline consider in this decision? 1. The airline should consider the impact of the new flight on other flights to Los Angeles. That is, whether the seats sold on the new flight are truly incremental seats for the airline, or whether passengers are shifting from one of the airline's other flights to this new flight. 2. The airline should consider the impact of the new flight on system load. 3. The airline should consider the rise in the fixed cost. 4. The airline should consider if it has sufficient resources to add the new flight in terms of money and man power. K Analyze Global Air's cost-volume-profit relationships Global Air is considering a new flight between Atlanta and Los Angeles. The average fare per seat for the flight is $760. The costs associated with the flight are as follows: Fixed costs for the flight: Crew salaries Operating costs Aircraft depreciation Total Variable costs per passenger: $ 5,000 50,000 25,000 $80,000 Passenger check-in Operating costs Total $ 20 100 $120 The airline estimates that the flight will sell 175 seats. a. Determine the break-even number of passengers per flight. Break-Even Sales (units) passengers b. Based on your answer in (a), should the airline add this flight to its schedule? The airline should the flight. The number of passengers is the break-even number of passengers for the flight. c. How much profit should each flight produce? d. Based on the case and your answers what additional issues might the airline consider in this decision? 1. The airline should consider the impact of the new flight on other flights to Los Angeles. That is, whether the seats sold on the new flight are truly incremental seats for the airline, or whether passengers are shifting from one of the airline's other flights to this new flight. 2. The airline should consider the impact of the new flight on system load. 3. The airline should consider the rise in the fixed cost. 4. The airline should consider if it has sufficient resources to add the new flight in terms of money and man power.