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Problem 11-21 (Algo) Dropping or Retaining a Flight [LO11-2] Profits have been decreasing for several yeals at Pegasus Alrines, in an effort to improve the companys performance, the campary zis thinking about dropping severat flights that appear to be unprafitable. A tyilcat hcome statement for one round-trip of one such fight (flight 482 2 is as follows: The following additional information is available about tight 482 a. Members of the fight crew are paid foved annuat salarhs, whereas the fight assistants are paid based on the number of round trips they complete. b. Orie-third of the liabilify itsurance is a speclal charge assessed against fight 482 because in the opinion of the insurance compary. the chestination of the flight is in a 'high-risk' area. The remaining two-thirds would be unatfectied by a decksign to drop fight 482 . c. The baggage loading and tilight preparason expense is an allocotion of ground crews' salanes and depreciation of ground equitprent Dropping flight 482 would have no effect on the companyis total baggage loading ind thght preparation expenses d. If fight 482 is dropped, Pegasus Alitines has no authorizatian at present to replace it with another fight. e. Arcraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible CDiopphy fipht 482 would not allow Pegasus Alrines to reduce the number of aireraft in its fieet or the number of nipht crew on its payroll. Required: 1. What is the Ainancial advartage (disadvantagel of discontinuing flight 482

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