Brief description about Redlands Air Budgeting
Problem- Redlands Air, Inc charges $75 per hour for flight instruction. The company has $25,000 of annual fixed admininistrative costs, and pays $15,000 rental expense to Inland Empire Airport each year. Redlands incurs a $20,000 annual insurance premium to insure its aircraft and facilities.
In addition, the company gathers the following variable cost data per hour of flight instruction- Instruction Salary $30- Fuel $12- Aircraft $ 6
Part 1- Assume Redlands Air, Inc. does not have to pay income taxes due to previous years operating losses.
A- Compute Redlands Airs's breakeven point in hours of flight instruction (round up to the next whole hour.)
B- Determine the amount of revenue it needs to breakeven.
C- Calculate the number of flight hours and amount of revenue the firm needs to order to generate income of $40,000.
D- Calculate the number of flight hours and the amount of revenue the firm need in order to generate a 10% net profit margin (net profit margin = net income/sales revenues).
Part 2- Answers questions 1-4 in part A if Redlands Air has a 40% income tax rate.
I need help to explain the Redland air budgeting and compute the given problems.