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  1. business
  2. accounting
  3. profits have been decreasing for several years at

Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve...

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Accounting

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Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, the company is thinking about dropping several flights that appear to be unprofitable A typical income statement for one round-trip of one such flight (flight 482) is as follows Ticket revenue (105 seats x 40% occupancy x $65 ticket price) Variable expenses ($14.00 per person) Contribution margin Flight expenses: $2,730 100.0% 588 2,142 21.5 785% Salaries, flight crew Flight promotion Depreciation of aircraft Fuel for aircraft Liability insurance Salaries, flight assistants Baggage loading and flight preparation Overnight costs for flight crew and assistants $36e 680 450 190 270 750 175 at destination Total flight expenses Net operating loss 70 2,945 $(803)

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