# Convergatioris M ChameMlEx-V n News|DasFrhiaard_ ‘ x .’_’Impeualjewelersircun’. q 260 I. w Problem 12-2I Dropplng or Retalning a Fllgl1t[LOI2-2] Pram…

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Problem 12-21 Dropping or Retaining a Flight [LO12-2]

Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company’s performance, consideration is being given to dropping several flights that appear to be unprofitable.

A typical income statement for one round-trip of one such flight (flight 482) is as follows:

Convergatioris M ChameMlExé-V n News|DasFrhiaard_ ‘ x .’_©’Impeualjewelersircun’. q 260 I. w Problem 12-2I Dropplng or Retalning a Fllgl1t[LOI2-2] Pram hive been degenmvur severa‘years 5k Pegam Arrhm. In an eﬁgn «g murwe «be cvmuinv‘serurmanm‘ cummrahnn ham wen Iu druunm several Hum; Um auwar «n be unumﬂtihb A Warm Hiram: men-era mr une rum-mu m we sum mm mm 4&amp;2] a as mum Tm reuenue mm 52m 140% muuancy x 57mm awe] 5 2mm 1mmWrmmeexpznsaa (513 unper peregn) 52m 155ounnrrbuugn margu. 2239 31 mFrgm eupereee Saranee ﬂight new 5 m Frgm pmmmmn m Depreummn M mruan 450 rue rbr Mum! 2m) Lrabm, Insurance 21 n Samru‘ mg»: mmanu m Baggage reegrng and «gm preparmmn 175 ouerngm mm «er mgm Haw ang assmamsmnummmn an mar mm 8303an Mel npzmlmg r s (545) ,— Tneruuuwrng mmnnm mum-mm» e muabe mm mm 4.32 3 Members anne MM crew are para men annual sararu, wnereaa me mam aesmama are um baeeu unme number mruunmnusmey Camille]: b Onemrrn anne hamlm] ueurme e almmmame W against mm Aaz became rnme nurnrgn :11me rneuranee can-um me aemmrun mm: mm rn z-mgnrar area Tne remawng Man‘kwmm be unaﬁeclen by a nemrgn m ﬂrnp ngmaaz c The baggage hnmng ann mgm prepamrun Expense an aHMalmn mgrnunn crews’ mares annuepreeamn mgrgunn egurprnem Druppuug mm 432 wnnlﬂ have nu eﬁecl an me cumpanye mm baggage uramng ana mgm preparaugn eupeneee wugm 432 sumppsﬂ‘ Pegasusmrhm nae nu amnnrlzamn a1 presem m rebraee n wnn anmnerngm Arman aepreualmn e «be enurer, m nhsmasnence Deprecmmn uue in wear and tear us negrrgrbe u rapprng ngm 432 wnuh‘i nm anw pegaaue Alrlmes m reuuee me number m arrean n In: «eel nr me number amgm crew an n: payruu -me Rwuued:1 Preuare arr iniVySEahme wnm rmuact drvuum mum 432mm hm unlne arrlrne’: arm: (A n)’ones’ reducbrem ebuum be rndrcaced bya mrnue “and Cnmnhuunn margrn um memur necumrnueaLess Ham amen-a4 can be murder: Mbe 11am émwmmmme DrummmnFus‘ Var arruam Lrabrmy rneuranee Si‘anﬁsr mam int:owermm cmfnr ﬁghtucw am a-mrna Ne! rneeeee manage} m pram me «gm neeununuen ‘- : ‘?D E] ENG 918.92

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