Question

Comfi 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 Comfi’s base airport to the major city in the state, Metropolis. Each month, 40 round-trip flights are made. Shown below is a recent month’s activity in the form of a cost-volume-profit income statement. Fare revenues (400 passenger flights) $48,000 Variable costs Fuel $12,280 Snacks and drinks 760 Landing fees 1,800 Supplies and forms 1,000 15,840 Contribution margin 32,160 Fixed costs Depreciation 3,100 Salaries 16,458 Advertising 500 Airport hanger fees 1,650 21,708 Net income $10,452 Calculate the break-even point in dollars. Break-even point $ LINK TO TEXT Calculate the break-even point in number of passenger flights. Break-even point flights LINK TO TEXT Without calculations, determine the contribution margin at the break-even point. Break-even point $ LINK TO TEXT If ticket prices were decreased by 10%, passenger flights would increase by 25%. However, total variable costs would increase by the same percentage as passenger flights.