In this module you will have an opportunity to demonstrate your understanding of cost, volume, profit, and their application in the aviation industry. For this Case Study complete the four requirements below:
- ABC Passenger Service Airlines has determined the breakeven point, both in dollars and passengers, necessary to breakeven. Explain how an increase or decrease of passengers from the breakeven point would affect the profit or loss of the firm.
- You are a management analyst for XYZ aircraft manufacturing company. Your company currently manufactures and sells four different types of aircraft. Historically, each aircraft type constitutes 25% of the total revenue. For each aircraft type the unit contribution margin, expressed as a per cent of sales, is different. If this year the sales mix is different than the historical average, explain what affect this would have on the breakeven point?
- Two companies have the same fixed expenses, unit variable expense, and profits. However, one company sells its products for a lower price. Explain what might be the reason(s) they do this?
- Refer to Problem 7-42 at the end of Chapter 7. Build or use an existing Excel Spreadsheet and complete requirements 1 and 3. The spreadsheet must accompany the submission.
For this case study, you will demonstrate your ability to correctly calculate the problem and demonstrate creative thinking by analyzing the case and answering the questions that are intended to interpret the data.