​ -An Airline Is Considering Adding a Flight from Chicago to Chicago

question 35

Multiple Choice

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-An airline is considering adding a flight from Chicago to Sioux Falls.Revenue from the flight is expected to be $3,000.The total cost of the flight is $5,500, and the variable cost is $2,000.Should the airline add this flight?

• A)No, the revenue ($3,000) is below the cost ($5,500).
• B)No, the addition to profit is very small and not worth the effort.
• C)Yes, profit increases by $1,000 ($3,000 − $2,000).
• D)Yes, profit increases by $3,000.

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Definitions:

Treasury Stock

Shares of a company's own stock that it has reacquired from shareholders and holds in its treasury for future use.

Accounting

The information system that identifies, records, and communicates the economic events of an organization to interested users.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing corporation, reducing the amount of outstanding stock.

Total Assets

The sum of all resources owned by a company, expressed in monetary terms, including both current and non-current assets.