Scenario 14-5 An Airline Knows That There Are Two Types of Travelers

question 250

Multiple Choice

Scenario 14-5
An airline knows that there are two types of travelers: business travelers and vacationers.For a particular flight,there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket.There are 150 seats available on the plane.Suppose the cost to the airline of providing the flight is $20,000,which includes the cost of the pilots,flight attendants,fuel,etc.
-Refer to Scenario 14-5.How much profit will the airline earn if it sets the price of each ticket at $600?

• A) -$5,000
• B) $15,000
• C) $40,000
• D) $60,000

Understand the difference between absorption costing and variable costing and how each affects operating income.

Comprehend how production levels affect operating income under both costing methods.

Recognize the components and significance of contribution margin in decision-making.

Identify the relevance and application of variable costing in service firms.

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Workplace Accidents

Unplanned events or incidents that occur in the work setting, resulting in injury, illness, or damage.

Safety-Issue Clause

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Employment that exposes workers to risk of accidents or health issues, often requiring stringent safety measures and regulations.

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A legal contract between an employer and a union representing the employees, outlining the terms of employment, wages, and conditions.