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

## Question:

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.

Instructions
(a) Calculate the break-even point in
(1) Dollars and
(2) Number of fares.
(b) Without calculations, determine the contribution margin at the break-even point.
(c) If fares were decreased by 10%, an additional 100 fares could be generated. However, total variable costs would increase by 20%. Should the fare decrease beadopted?

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## Step by Step Answer:

Related Book For

## Managerial Accounting Tools for business decision making

ISBN: 978-1118096895

6th Edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

Question Details
Chapter # 6
Section: Exercises
Problem: 4
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Question Posted: March 22, 2012 03:56:03