Pacific Airways provides air travel services between Los Angeles and Seattle. Cost information per flight is as follows: Variable Costs Fixed Costs per Passenger Plane depreciation per Flight $9,500 Crew salaries 900 Fuel 2,500 $18 Ground salaries 1,100 12 Airport fees Passenger services Total 2,100 10 $16,100 $40 Each flight has a capacity of 150 seats, with an average of 125 seats sold per flight at an average ticket price of $180. Assume Pacific Airways is considering a new service that would provide tickets at half price. Passengers would need to fly standby to receive the discount, but would be provided a flight for a given day of travel. An analysis revealed that an average of 8 existing passengers would use the new discounted tickets for travel. In addition, 15 new passengers would be attracted to the offer. a. Determine the contribution margin per passenger for the full-priced ticket. b. Determine the break-even number of seats sold per flight. seats Determine the contribution margin per passenger for discounted tickets.
Pacific Airways provides air travel services between Los Angeles and Seattle. Cost information per flight is as follows: Variable Costs Fixed Costs per Passenger Plane depreciation per Flight $9,500 Crew salaries 900 Fuel 2,500 $18 Ground salaries 1,100 12 Airport fees Passenger services Total 2,100 10 $16,100 $40 Each flight has a capacity of 150 seats, with an average of 125 seats sold per flight at an average ticket price of $180. Assume Pacific Airways is considering a new service that would provide tickets at half price. Passengers would need to fly standby to receive the discount, but would be provided a flight for a given day of travel. An analysis revealed that an average of 8 existing passengers would use the new discounted tickets for travel. In addition, 15 new passengers would be attracted to the offer. a. Determine the contribution margin per passenger for the full-priced ticket. b. Determine the break-even number of seats sold per flight. seats Determine the contribution margin per passenger for discounted tickets.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter25: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 1MAD: Analyze Pacific Airways Pacific Airways provides air travel services between Los Angeles and...
Related questions
Question
Only typed solution
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College