• Ask an Expert
• Get a Professional Answer
• 100% Satisfaction Guarantee
Neo, Tutor
Category: Homework
Satisfied Customers: 12101
Experience:  BS Accounting
4224391
Type Your Homework Question Here...
Neo is online now

# E5-9 Regional Airways, Inc., a small two-plane passenger airline,

### Resolved Question:

E5-9 Regional 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 Regional’s base airport to the major city in the state,
Metropolis. Each month 40 round-trip flights are made. Shown on page 219 is a recent
month’s activity in the form of a cost-volume-profit income statement.
Fare revenues (300 fares) \$45,000
Variable costs
Fuel \$14,000
Snacks and drinks 800
Landing fees 2,000
Supplies and forms 1,200 18,000
Contribution margin 27,000
Fixed costs
Depreciation 3,000
Salaries 15,000
Airport hanger fees 1,750 20,250
Net income \$ 6,750
Instructions
(a) Calculate the break-even point in (1) dollars and (2) number of fares.
(b) Without calculations, determine the contribution margin at the break-even point.
(c) If fares were decreased by 10%, an additional 100 fares could be generated. However, variable costs would increase by 35%. Should the fare decrease be adopted?
Submitted: 5 years ago.
Category: Homework
Expert:  Neo replied 5 years ago.
Good day!

Please do not forget to click the Accept button.

For your future questions, please feel free to address them to me by adding "For Neo" at the beginning of your posts.

Thank you so much! :)
Customer: replied 5 years ago.
I am very confused by the answer. I am trying to understand the assignment and looking at the instructions and the reply they are very confusing.
Expert:  Neo replied 5 years ago.