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Problem 13-21 (Static) Dropping or Retalning a Flight (L013-2) 5,800 Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company's performance, the company is thinking about dropping several flights that appear to be unprofitable. A typical Income statement for one round-trip of one such flight (ight 482) is as follows: sloket revenge (175 seats 408 occupancy * $200 leket price $ 14,000 100.00 Variable expenses (515 per perton) 1.050 7.5 Contribution margin 12,950 92.50 Ylight expenses salaries, light crew $1,000 Flight promotion 750 Depreciation of aircratt 1.550 Tuol for at Llability Lane 4,200 salaries, tostante 1.500 baggage loading and light preparation 1.700 Overnight coats or tight crew and tante destination 300 total tight expenses 12D Net operating loss (6.650) The following additional Information is available about fight 482: a. Members of the flight crew are paid fixed annual salarios, whereas the flight assistants are paid based on the number of round trips they complete b. One-third of the ability insurance is a special charge assessed against right 482 because in the opinion of the insurance company the destination of the flight is in a "high-risk" area. The remaining two-thirds would be unaffected by a decision to drop flight 482 c. The baggage loading and light preparation expense is an allocation or ground crows'salaries and depreciation of ground equipment Dropping flight 482 would have no effect on the company's total baggage loading and light preparation expenses. d. If flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another night. e Aircraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is nog igible 1. Dropping flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its payroll Required: 1. What is the financial advantage (disadvantage) of discontinuing flight 4827

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