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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 fights thot appear to be unprofitable. A typical income statement for one round-trip of one such flight (filight 482) is as follows: The following odditional information is avallable about flight 482 : a. Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are paid based on the number of tound trips they complete. b. One-third of the liability insurance is a special charge assessed agoinst fight 482 because in the opinion of the insurance company, the destination of the filght is in a "high-risk" area. The remaining two-thirds would be unaffected by a decision to drop fight 482 . c. The baggage loading and fight preparation expense is an allocation of ground crews' salaries and depreciation of ground equipment. Dropping flight 482 would have no effect on the company's total baggage loading and fight preparation expenses. d. If flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another flight. e. Alrcraf depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible. f. Dropping flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of fight crew on its payroll. Required: 1. What is the financlal advantage (disadvantage) of discontinuing filiht 482

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