Cost Analysis Of Airline Industry

Break-even comparability Fixed price + (variable be x genuine passengers) Is advert to perform x actual passengers For Flight WC0102, this is how we would make this equation : COSTS=REVENUE 10,000 + 50 x P=200 x P =>10,000=150 x P =>P=10,000 150 =>=66.66 =>=67 So, we croup analyze that trajectory WC0102 moldiness sell 67 seats in order to commit even. This is the touch at which court matches revenue for that particular flight. Anything downstairs 67 passengers, and it will lose money, anything above 67, and it make money. delimitation costing is used to work come out of the wardrobe the victuals which should be commitd at any devoted point. In other words, when you know the fixed and variable be for a flight, you can then work out how such(prenominal) to send each passenger. For example, the 25th passenger will non have the comparable mariginal cost (i.e. will not be charged the homogeneous fare) as the 50 th passenger. Again, we can illustrate this point by using a dewy-eyed formula, as follows: encircling(prenominal) cost formula for x passengers (x = 50 in this example) Fare for Passenger no.

P =Fixed Cost+variable star cost per Passenger P Where x = 50 =>10,000+50 50 =>250This is the marginal cost and hence the fare you should charge the 50 passengers, if you intrust this is the people you will achieve standard of other marginal costs for flight WC0102 are (Note : if we believe this is the volume we will achieve, then this represents the fare we should charge in order to break even ) P = 1Marginal Cost=10050i.e10,000 + 50 ! 1 P = 10Marginal Cost=1050i.e10,000 + 50 10 P = 25Marginal Cost=450i.e10,000 + 50 25 P = 50Marginal Cost=250i.e10,000 + 50 50 P = 100Marginal Cost=150i.e10,000 + 50 100If you want to establish a in full essay, order it on our website: OrderCustomPaper.com

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