(Solution) - Mideast Airways Inc a small two plane passenger airline has -(2025 Original AI-Free Solution)

Paper Details

Mideast 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 Mideast?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.

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, total variable costs would increase by 35%. Should the fare decrease beadopted?