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Finance and Business - Essay Example
Author : irunolfsson
Finance & Accounting
Pages 3 (753 words)
Finance and Business Name University All the calculations in this report are based on the assumption that the jet aircraft has been obtained by Westcoast Air co. in the form of an Operating Lease which is reported as an Operating expense in the income statement…
Income Statement (per flight) (Fare Lowered) Average number of passengers per flight Average total revenue (212*280) Variable Costs Fuel costs Food and Beverage service costs (4*212) Commission to travel agents (10% of 59,360) Gross Profit Fixed Costs Fixed annual lease costs Fixed ground services costs Fixed flight crew salaries Operating Loss 212 59,360 (14,000) (848) (5936) 38,576 (53,000) (7,500) (7,000) (28,924) 3. Income Statement (per flight for Travel International’s offer) Number of flights by Travel International Revenue from Travel International Fixed Costs Fixed annual lease costs Fixed ground services costs Fixed flight crew salaries Operating Income 24 75,000 (53,000) (7,500) (7,000) 7,500 Report The calculations in the first part illustrate that Westcoast Air co. is currently incurring an operating loss of $31,012.5. This is mainly due to the fact that the costs are exceeding the revenues by a considerable margin. ...