Question scope: Short term decision making Indigo Airlines provides its passengers with the option of joining their club, which entitles them to use club facilities at any Malaysian airport. Club members have access to a private lounge and restaurant, as well as discounts on food and drinks. Due to the pandemic, Indigo had been facing a decline in profit, thus their club has shown consistent loss. The recent statement are as follows: Sales revenue RM150,000 Variable expenses: (70,000) (40,000) (25,000) Food and drinks Personnel Variable overhead Contribution margin Fixed expenses: Club building Depreciation Supervisory salary Airport fees General overhead (allocated) Profit (loss) 15,000 (30,000) (25,000) (15,000) (10,000) (65,000) The variable fees for all clubs can be avoided if the club stops producing. Indigo Airlines, on the other hand, has agreed to keep the club house as supervisors will no longer be employed if the club closes, and Indigo will no longer pay airport fees. Requirements: Determine if Indigo Airlines' club services should be terminated. Show the outcomes from your calculations.

Question scope: Short term decision making Indigo Airlines provides its passengers with the option of joining their club, which entitles them to use club facilities at any Malaysian airport. Club members have access to a private lounge and restaurant, as well as discounts on food and drinks. Due to the pandemic, Indigo had been facing a decline in profit, thus their club has shown consistent loss. The recent statement are as follows: Sales revenue RM150,000 Variable expenses: (70,000) (40,000) (25,000) Food and drinks Personnel Variable overhead Contribution margin Fixed expenses: Club building Depreciation Supervisory salary Airport fees General overhead (allocated) Profit (loss) 15,000 (30,000) (25,000) (15,000) (10,000) (65,000) The variable fees for all clubs can be avoided if the club stops producing. Indigo Airlines, on the other hand, has agreed to keep the club house as supervisors will no longer be employed if the club closes, and Indigo will no longer pay airport fees. Requirements: Determine if Indigo Airlines' club services should be terminated. Show the outcomes from your calculations.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 3TIF

See similar textbooks

Similar questions

Ruby Airlines offers its passenger the opportunity to join Ruby Express Club that entitles a traveler to use the club facilities at any Malaysian airports. Club privileges include a private lounge and restaurant, discounts on meals and beverages and use of a small health spa. As with other airlines around the globe, Ruby has been facing a decline in profit attributable to the Covid19 pandemic movement restriction. The Club, in particular, has shown consistent loss. The recent statement follows: Sales revenue RM150,000 Variable expenses: Food and beverages Personnel Variable overhead (70,000) (40,000) (25,000) Contribution margin 15,000 Fixed expenses: Club building Depreciation Supervisory salary Airport fees General overhead (allocated) (30,000) (25,000) (15,000) (10,000) Profit (loss) (65,000) All Club’s variable expenses can be avoided should the club be discontinued. However, Ruby will continue to own the club building. The…
Ruby Airlines offers its passenger the opportunity to join Ruby Express Club that entitles a traveler to use the club facilities at any Malaysian airports. Club privileges include a private lounge and restaurant, discounts on meals and beverages and use of a small health spa. As with other airlines around the globe, Ruby has been facing a decline in profit attributable to the Covid19 pandemic movement restriction. The Club, in particular, has shown consistent loss. The recent statement follows:(see the photo) All Club’s variable expenses can be avoided should the club be discontinued. However, Ruby will continue to own the club building. The supervisory staff will no longer be employed if the club closes. Ruby will no longer pay the airport fee. Required: Decide whether Ruby should discontinue the club operations. Show your computation.
Jaguar tea shop located at Davao city has been established in 2010. It has a total of 100 seating capacity and a total cover of 46908 for the year 2020 and 54344 for 2021. Required: Assess the net profit part. Provide negative and positive observation. Answer this completely for an upvote.
Jaguar tea shop located at Davao city has been established in 2010. It has a total of 100 seating capacity and a total cover of 46908 for the year 2020 and 54344 for 2021. Required: Assess the net profit part. Provide negative and positive observation.
Jaguar tea shop located at Davao city has been established in 2010. It has a total of 100 seating capacity and a total cover of 46908 for the year 2020 and 54344 for 2021. Required: Assess the gross profit. Provide negative and positive observation.
Jaguar tea shop located at Davao city has been established in 2010. It has a total of 100 seating capacity and a total cover of 46908 for the year 2020 and 54344 for 2021. Required: Assess the revenue part. Provide negative and positive observation. Answer this for an upvote.
Assume that a Hong Kong tourist agency approached the president of the airline about flying chartered tourist flights from Manila to Hong Kong. The tourist agency has offered the airline P180,000 per round-trip flight on a jumbo jet. Given the airline’s usual occupancy rate and airfares, a round-trip jumbo jet generates revenue of P270,000. Sales Revenues: Passenger P270,000 Cargo 40,000 P310,000 Variable Costs 120,000 Fixed Costs 100,000 220,000 Net Income 90,000 If the offer is accepted, the company will not incur reservations and ticketing costs estimated to be P10,000. There is also excess capacity to cater to the additional flights of the special offer. 1. Determine the relevant/differential costs. 2. Should the offer be accepted?
Khaleej Airways has wide network of flights all over GCC. Most of the flights operate to or from the company's headquarter, an airport based in Gulf.. The Khaleej Airways' executive management receives monthly reports on the profitability of each flight route, and any loss-making routes that are considered to be closed. The report below shows the average loss on each one-way flight between Oceana and Peninsula (in either direction): BHD BHD Sales of Ticket (occupancy is 60% & aircraft is 150 seater) 9,000 Price of Ticket =BHD100 Operating Cost: Security (Airport) Charge Advertising Expense Fuel (Aviation) Depreciation Salaries (Airline Crew) (450) (600) (3,600) (2,200) (1,100) Staff on ground Expense (800) (2,400) (500) Insurance Allowance for Airline crew (overnight stay) Total operating costs Loss 11,650 2,650
Golden Tours, Inc., operates tours throughout the United States. A study has indicated that some of the tours are not profitable, and consideration is being given to dropping these tours to improve the company’s overall operating performance. One such tour is a two-day Historic Mansions bus tour conducted in the southern states. An income statement from a typical Historic Mansions tour is given below: Ticket revenue (110 seat capacity × 45% occupancy × $60 ticket price per person) $ 2,970 100 % Variable expenses ($18 per person) 891 30 % Contribution margin $ 2,079 70 % Tour expenses: Tour promotion $ 650 Salary of bus driver 330 Fee, tour guide 690 Fuel for bus 130 Depreciation of bus 330 Liability insurance, bus 180 Overnight parking fee, bus 50 Room and meals,…
This question builds on your work from B-1. Competition is fierce for the Chicago to Atlanta route, and the airline realizes that it may need to reduce the current ticket price. They ask you to provide projections for number of reservations, number of denied passenger check ins (due to overbooking), penalties, sales, net income, and profit margin for this route at different ticket prices. The average number of reservations for this route is 184 when the ticket price is $420, use those figures as a base for your calculations. The airline conducted a price sensitivity analysis and determined that for every $20 increase in ticket price, demand will decrease by 1 ticket reservation. Similarly, ticket sales will increase by 1 reservation for every $20 decrease in ticket price. Using an appropriate data table, calculate the number of reservations, number of passengers denied check ins (due to overbooking), total penalties, total sales, net income, and profit margin (as a percentage) for…
Case Analysis: CBA Rural Bank is a rural bank serving the entire Zamboanga Peninsula and just like any business organization it has been significantly affected by the pandemic. It has 13 branches all over ZP and a total of 170 employees as of the latest manpower headcount. Below is its hypothetical manpower data and labor productivity-related costs: With the financial information given above, briefly answer the following How has the income been affected because of the pandemic? What could be the reason for its decreasing trend? What do you think was the strategy of the bank in terms of how it managed its human resources taking into consideration its manpower data and its salaries expenses? What could be the major decisions of the HRD Department in terms of its training in consideration of its decreasing amount of training expense? Build a hypothetical scenario if needed in your justification.
One of the major advantages of small businesses is that the investment for running the business is not a major issue this statement is a.Fully false b.Partly false c.Fully true d. Partly true In one of the reputed firm total number of employees were more than 150 and the annual sales in 2019 was around 5 million OMR. In 2020 the company had a huge crisis because of the Corona pandemic which leads them to decrease their number of workers to 55, as a cosuquance their annual sales drop to 723,000 OMR. Based on last year data and according to the Ministry of commerce and industry the business will be categorized under a.None of the given options b.Micro business enterprise c.Small business enterprise d.Medium business enterprise Which of the following Statement(s) is/are Correct? Statement 1: Entrepreneurship is a systematic process of applying creativity and innovation to needs and opportunities in the marketplace Statement2: Entrepreneurship involves using old ideas to create a product…