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 $15,040
Snacks and drinks 680
Landing fees 2,000
Supplies and forms 1,000 18,720
Contribution margin 29,280
Fixed costs Depreciation 2,950
Salaries 14,514
Advertising 500
Airport hanger fees 1,800 19,764
Net income $9,516
Calculate the break-even point in dollars. Break-even point
Calculate the break-even point in number of passenger flights. Break-even point
Without calculations, determine the contribution margin at the break-even point.
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. (1) How much would net income be impacted by this change? Net income.