Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 5.00 points freeflight airlines is presently opera

5.00 points Freeflight Airlines is presently operating at 70 percent of capacity. Management of the...

80.2K

Verified Solution

Question

Accounting

image
5.00 points Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight's routes between Europe and the United States. If these routes are dropped, the revenue associated with the routes would be lost and the related variable costs saved. In addition, the company's total fixed costs would be reduced by 20 percent. Segmented income statements for a typical month appear as follows (all amounts in millions of dollars) Within Between U.S Routes Sales Variable costs Foxed costs allocated to routes Within U.S. Europe and Europe 3.18 $2.70 0.90 1.28 $0.31 $ 0.52 S 2.75 1.70 1.38 (0.33) 1.21 1.66 Operating profit (loss) Required a. Prepare a differential cost schedule. (Enter your answers in millions rounded to 2 decimal places.) Alternative: Drop U.S. to Europe Status Quo lower under Revenue Less: Variable costs Contribution margin Less: Fixed costs Operating proft (loss) b. Should Freeflight drop the routes between Europe and the United States? Yes O No

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students