Transpacific Airlines (TPA) budgeted 80 million passenger-miles, or 5 percent of the total market for the year just completed at a contribution margin of 40 cents per mile. The budgeted variable cost is 12 cents per mile. The operating data for the year show that TPA flew 69.12 million passenger-miles with an average price of 48 cents per passenger-mile. The terrorist activity in the early part of the year in several countries in the region decreased the total miles flown by all airlines for the year by 10 percent. There is no flexible-budget variance for all costs.

Budgeted sales	80,000,000	miles
Actual Sales	69,120,000	miles
Budgeted selling price	$ 0.52	=.40+.12 per mile
Actual selling price	$ 0.48	per mile
Budgeted contribution	$ 0.40	per mile
Budgeted market share	5%
Decrease in total market for all airlines	10%

Required

Assess the effects of the price, sales volume, market size, and market share on the firm’s operating results for the year.