Empire Airlines reports the following cost data for the year. The company flew 100 private flights during the year. A group has offered Empire $11,100 for a private flight to Chicago for its members. Revenue$ 20,100per flight Wages, salaries, and benefits$ 7,100per flight Fuel and oil$ 4,600per flight Food and beverages$ 520per flight Depreciation$ 305,000per year Rent$ 255,000per year (a) What is the contribution margin from accepting the offer

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Parrain Parrain · Answer 1 · 2021-10-20T12:06:31+02:00

If Empire Airlines accepts the offer, their contribution margin from that trip would be -$1,120

Contribution margin is calculated as:

= Revenue - Variable costs

The revenue the group is offering is $11,100.

The Variable costs are;

= Wages + Fuel + Food

= 7,100 + 4,600 + 520

= $12,220

The Contribution margin is:

= 11,100 - 12,220

= -$1,120

In conclusion, the contribution margin is -$1,120

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