Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Textbook Question
Chapter 6, Problem 1MAD
Analyze Global Air’s cost-volume-profit relationships
Global Air is considering a new flight between Atlanta and Los Angeles. The average fare per seat for the flight is $760. The costs associated with the flight are as follows:
The airline estimates that the flight will sell 175 seats.
- a. Determine the break-even number of passengers per flight.
- b. Based on your answer in (a), should the airline add this flight to its schedule?
- c. How much profit should each flight produce?
- d. What additional issues might the airline consider in this decision?
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Global Air is considering a new flight between Atlanta and Los Angeles. The average fare per seat for the flight is $780. The costs associated with the flight are as follows:
Fixed costs for the flight:
Crew salaries................................................
$ 4,860
Operating costs...........................................
50,000
Aircraft depreciation..................................
25,000
Total.........................................................
$ 79,860
Variable costs per passenger:
Passenger check-in.....................................
$ 20
Operating costs...........................................
100
Total.........................................................
$ 120
The airline estimates that the flight will sell 170 seats.
a. Determine the break-even number of passengers per flight.
b. Based on your answer in (a), should the airline add this flight to its…
Global Air is considerng a new flight between Atlanta and Los Angeles. The avaerage fare per seat for the flight is $760.The cost associated with the flight are as follows:
Fixed cost for the flight
Crew Salaries $5,000
Operating Costs 50,000
Aircraft Depreciation 25,000
Total: $80,000
Variable cost per passenger
Passenger check-in $20
Operating Costs: 100
Total: $120
The airline estimates that the flight will sell 175 seats.
a. determine the break-even number of passengers per flight
b. Based on answer in (a), should the airline add this flight to it's schedule?
c. How much profit should each flight produce?
d. What additionl issues might the airline consider in this decision?
A corporate executive jet with a seating capacity of 20 has the following cost factors:
The company flies three round trips from Boston to London and back perweek. a distance of 3.280 miles one way. How many passengers must be carried on an average round trip in order to justify the use of the jet if the alternative commercial airline first-class round-trip fare is $3,400 per passenger? The firm's MARR is 15%. ( Ignore income-tax consequences.)
Chapter 6 Solutions
Managerial Accounting
Ch. 6 - Describe how total variable costs and unit...Ch. 6 - Which of the following costs would be classified...Ch. 6 - Describe how total fixed costs and unit fixed...Ch. 6 - Prob. 4DQCh. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Prob. 8DQCh. 6 - Prob. 9DQCh. 6 - What does operating leverage measure, and how is...
Ch. 6 - High-low method The manufacturing costs of...Ch. 6 - Contribution margin Waite Company sells 250,000...Ch. 6 - Prob. 3BECh. 6 - Prob. 4BECh. 6 - Prob. 5BECh. 6 - Operating leverage Haywood Co. reports the...Ch. 6 - Margin of safety Jorgensen Company has sales of...Ch. 6 - Classify Costs Following is a list of various...Ch. 6 - Identify cost graphs The following cost graphs...Ch. 6 - Identify activity bases For a major university,...Ch. 6 - Prob. 4ECh. 6 - Identify fixed and variable costs Intuit Inc....Ch. 6 - Relevant range and fixed and variable costs Child...Ch. 6 - High-low method Ziegler Inc. has decided to use...Ch. 6 - Prob. 8ECh. 6 - Contribution margin ratio Young Company budgets...Ch. 6 - Contribution margin and contribution margin ratio...Ch. 6 - Prob. 11ECh. 6 - Break-even sales Anheuser-Busch InBev SA/NV (BUD)...Ch. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Break-even analysis for a service company3 Sprint...Ch. 6 - Prob. 17ECh. 6 - Prob. 18ECh. 6 - Prob. 19ECh. 6 - Prob. 20ECh. 6 - Prob. 21ECh. 6 - Prob. 22ECh. 6 - Prob. 23ECh. 6 - Prob. 24ECh. 6 - Prob. 25ECh. 6 - Classify costs Seymour Clothing Co. manufactures a...Ch. 6 - Break-even sales under present and proposed...Ch. 6 - Prob. 3PACh. 6 - Prob. 4PACh. 6 - Prob. 5PACh. 6 - Contribution margin, break-even sales,...Ch. 6 - Classify costs Cromwell Furniture Company...Ch. 6 - Prob. 2PBCh. 6 - Prob. 3PBCh. 6 - Prob. 4PBCh. 6 - Prob. 5PBCh. 6 - Contribution margin, break-even sales,...Ch. 6 - Analyze Global Airs cost-volume-profit...Ch. 6 - Prob. 2MADCh. 6 - Prob. 3MADCh. 6 - Prob. 4MADCh. 6 - Prob. 1TIFCh. 6 - Prob. 3TIFCh. 6 - Profitability strategies Somerset Inc. has...Ch. 6 - Prob. 5TIFCh. 6 - Analysis of costs for a shipping department Sales...Ch. 6 - Taylor Corporation is analyzing the cost behavior...Ch. 6 - Prob. 2CMACh. 6 - Bolger and Co. manufactures large gaskets for the...Ch. 6 - Prob. 4CMA
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