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Regional Airways 45000

Price: $1.99

Regional Airways, Inc., a small two-plane passenger airline, has asked for your
assistance in some basic analysis of its operations. Both planes seat 10 passengers each,
and they fly commuters from Regional’s base airport to the major city in the state,
Metropolis. Each month 40 round-trip flights are made.

(a) Calculate the break-even point in (1) dollars and (2) number of fares.
(b) Without calculations, determine the contribution margin at the break-even point.
(c) If fares were decreased by 10%, an additional 100 fares could be generated. However,
variable costs would increase by 35%. Should the fare decrease be adopted?

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